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A combination of fundamental factors and technical factors continue to give strength and space to the upward movement of commodities, whether agricultural or not. From soybeans to iron ore, the last few months have seen new levels being defined which, as Steve Cachia, market consultant at Cerealpar and TradeHelp explains, still have room to maintain.
“There is very aggressive global demand led by China, supply that does not grow in line with demand, dwindling stocks and a shortage of some products depending on the time of year. We were talking about poorly distributed stocks, now we are talking about scarce stocks, especially in soybeans until the arrival of the American harvest”, says Cachia.
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From now on, among the fundamentals for grains, the focus is on climate issues in the United States. And even with good conditions and a full harvest, it will still be insufficient to balance the relationship between supply and demand.
“Whoever is a buyer seeks to run after it to guarantee this product, whoever is a speculator sees an opportunity for gains on these days, many days, quite expressive, with a lot of volatility”, says the consultant, who also believes that there is room for this appreciation movement continue, which should lead to the maximums being reached this year. “The bulls have got it into their heads that they want to see highs this year”, he adds.
And although agricultural commodities stand out at this time of high prices, they end up pulling other groups of commodities, such as oil, for example, or other fuels, since at this moment the markets are correlated, also reflecting an economic recovery that ends up happening already in important economies – with emphasis on China and the United States – and mainly following the vaccination processes against Covid-19 in different parts of the world.
Cachia warns, however, of points of attention that moments like this require, mainly due to the intense participation of speculators in the face of earning opportunities. And in this search for gains, speculative funds can get rid of part of their positions and cause a drop, even if occasional, in prices.
“In addition to the fundamentals, the need to feed the population around the world and an economic recovery, we are now entering a moment of excitement in the market. A moment in which we can see rapid speculation up or down and where many decisions will be taken, perhaps, by emotion, more than by reason”, explains the consultant.
By: Carla Mendes | Notícias Agrícolas
