Agricultural commodities up following US-China deal

on Dec 18, 2019
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  • Agricultural commodities prices rose last week following the signing of the Phase One trade deal.
  • Wheat, corn, and soybeans remained bullish after an agreement between China and the US to increase agricultural produce exports.
  • Since Friday last week, gold has maintained a relatively stable price despite the shift from less risky assets following last week’s successful Stage One trade deal.

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After it was apparent that China and the US had agreed on the contents of the Phase 1 trade deal, prices of various commodities shot. The deal saw different tariffs cancelled and a few others reduced by both states.

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Policies relating to intellectual property were also tightened, and China agreed to import at least $200 billion worth of goods from the US over two years. Of the $200 billion, the two states agreed to allocate at least $80 to $100 billion to agricultural produce, boosting the US soft commodities market.

Soybeans

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For four days straight, soybeans price has been on the rise to hit a new high since Nov. 8. This month to date, the commodity has gained 5.7%, marking the highest increase since November 2018. Day traders recorded positive trades for six weeks consecutively, pushing net short positions to the highest since Sep. 10.

Soybeans’ eight-week rally that came to a close last week saw SUGAR speculations turn bullish since Jul. 9.

Wheat

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The prices of wheat surged on Monday to a record high since August last year and registered the biggest gain in a day since Oct. 11. But its 55-week moving average seems to be headed below the 100-weekly moving average at 4.9020, setting the first drop since January last year.

Just like Soybeans, wheat stocks recorded net sells for the first time since November.

Over the last weekend, the Argentines raised wheat export taxes from 6.7% to 12% to help fund new government programs.

The tax increment seemed to have cut across all major agricultural commodities, including 30% and 12% raise for Soybeans and Corn exports.

Corn

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For the fourth day in a row, corn has gone bullish to settle at levels not touched in about six weeks. Experts say the commodity seems to be testing resistance at the 200-day moving average at 3.8048, which has stopple prices since early last month.

Bullish gold

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Away from agricultural commodities, the yellow metal has been relatively stable despite a shift from less risky assets after the Phase One trade deal. Last week, gold posted one of its highest gains since September. However, the commodity settled below the 55-day moving average at 1,480.50, since Nov. 4.

Soybeans Wheat Agriculture Commodity