Agri Commodity Markets Research January 2024: Red C BOT

2024 kicked off with a pronounced divergence between soft commodities, which averaged an 10% increase, and G&O markets, which declined an average of 3.5%. It’s not a huge surprise: the Red Sea crisis is bearish for grain and oilseed futures, as US and EU producers are being forced to lower prices to compensate for higher freight costs (and the contracts have physical delivery in origin). This, alongside yield-boosting South American rainfall (for corn and soy), Chinese demand headwinds and a good production outlook for US and Russian wheat have pushed Non-Commercials into a three-year and eight-month high short G&O position. G&O consumers will read this report smiling from ear-to-ear as we expect a continuation of cooling prices in the coming months. For softs like coffee and cocoa, the Red Sea conflict is bullish, as physical settlement is done in destination (Europe and US), and clearly robusta is the most impacted. Furthermore, systemic production issues in West Africa have pushed London cocoa futures to a record high. Bitter news for chocolate lovers.

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  • Carlos Mera

    Head of Agri Commodities Markets
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  • Michael Magdovitz

    Senior Commodity Analyst
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  • Paul Joules

    Commodities Analyst
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