(Bloomberg) -- Crop prices are rounding out their biggest monthly advance in more than five years on China’s buying spree and concerns about South American dry spells.A Bloomberg gauge of grains and soft commodity spot prices rallied almost 9% this month through Friday, on pace for a sixth straight monthly gain. The La Nina climate phenomenon has curtailed rainfall in Brazil, the top grower of soybeans, coffee and sugar, sparking output concerns at a time when China’s feed-grain demand is booming.“South America’s weather continues to provide moisture for crops on an almost just-in-time basis,” Tobin Gorey, commodities strategist for Commonwealth Bank of Australia, said in a note. “The nagging doubt, though, is that the just-in-time rain is a good run of luck, rather than something that can be relied upon.”Soy futures have jumped 12% to $11.865 a bushel in Chicago this month, the largest increase since 2016, and corn is up 9% in November. Arabica coffee has soared 18%, and New York sugar is set for the longest streak of monthly gains in 14 years.While a Chinese government official rebuffed the idea that its massive grain imports are fueling an international price spike, a Rabobank outlook last week said surging import demand and weather worries could extend agriculture’s bull run into 2021. China’s corn and soy demand may climb further in the coming season and countries are bolstering stockpiles to guard against food inflation.China’s grain demand has been fueled by an unexpectedly fast recovery in hog herds after they were devastated by African swine fever, and the country’s economic recovery. Local prices of corn and food soybeans on the Dalian exchange are trading at or near records. A weaker dollar coupled with a strong yuan is also making purchases of American farm products by China more attractive.Still, there are signs of easing demand in the short-term, with some U.S. soybean cargoes canceled after the rise in prices. Wheat futures traded lower on Monday, with Russia considering raising a grain-export quota that’s been proposed for mid-February through June.Read more: China’s Set to Import More U.S. Corn and Squeeze Global Prices.For sugar, there are concerns of a bigger-than-expected global deficit with lower crop outlooks from Thailand, the European Union and Russia, amid uncertainty over the size and timing of Indian exports. Dry weather is seen impacting Brazil’s Center-South cane yields in 2021-22, and the market will be watching out for the impact of La Nina in the first quarter, according to Rabobank.Raw sugar futures were steady at 14.79 cents a pound on Monday, set for a seventh straight monthly gain.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
Indian sugar mills have for the first time in three years agreed export agreements without the support of government subsidies as they scramble to pay dues owing to farmers, four industry officials told Reuters. So far they have contracted 10,000 tonnes of white sugar for exports in the new season that began on Oct. 1, which they face selling at a loss, potentially weighing on international prices. India is the world's biggest consumer of sugar, but as the second biggest producer, produces more than required.
(Bloomberg) -- Cocoa futures capped the biggest weekly gain in 19 years amid jitters on West African trade and supply, pacing a rally in soft commodities.Ghana, the world’s second-biggest producer, criticized cocoa sustainability programs and companies that it said are backtracking on a pledge to pay more for beans. In Ivory Coast, the top grower, President Alassane Ouattara and his main political rival last week began talks to ease tensions over last month’s disputed election. Violence left at least 85 people dead and hundreds injured, the government said.Cocoa prices rose to the highest in almost nine months to gain for the sixth straight session, the longest rally since August. Speculation that Ghana’s output may trail year-earlier levels amid adverse weather helped bolster futures.“There are several issues for West African producers that could result in near-term supply bottlenecks,” the Chicago-based Hightower Report said. Concern that buyers are balking at paying the living-income differential, or LID, for Ivorian and Ghana supplies “has added more near-term supply anxiety to the market,” the report said.Cocoa for March delivery climbed 1.8% to close at $2,712 a metric ton on ICE Futures U.S. in New York. The price reached $2,746, the highest for a most-active contract since Feb. 27. This week, the commodity surged 15%, the most since November 2001.Hershey Co. took the unusual step of buying beans through the exchange rather than the physical market, skewing some price differentials.“With Hershey somewhat circumventing the LID price and taking the New York futures market by surprise, it’s completely upended the structure,” said David Cutler, vice president of soft commodities at R.J. O’Brien Ltd. in London. Raw sugar, arabica coffee and cotton capped the third straight weekly gains.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.