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Upward trajectory of commodities has room to continue supported by technical and fundamental factors

Posted by Rafael Moro

Image: Pixabay

A combination of fundamental factors with technical factors continues 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 been the definition of new levels that, as explained by Steve Cachia, market consultant at Cerealpar and TradeHelp, still have room to maintain themselves.

"There is a very aggressive global demand led by China, supply that doesn’t grow within the need for demand, less and less stocks and a shortage of some products depending on the time of year. We talked about poorly distributed stocks, now we talk about scarce stocks, mainly in soy until the American harvest begins", says Cachia.

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 go after this product, whoever is a speculator sees an opportunity for gains in 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 to be made later this year. "The bulls have put in their heads that they want to see maxims 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 time 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 following, mainly, the vaccination processes against Covid-19 in different parts of the world.

Cachia alerts, however, to points of attention such as moments like this require, mainly due to the intense participation of speculators in the face of opportunities for gains. And in this search for gains, speculating funds may part with their positions and cause some drop, even if punctual, in prices.

"In addition to the fundamentals, the need to feed the population around the world and an economic recovery, we now enter a moment of excitement in the market. A moment when we can see rapid speculation up or down and where many decisions will be made. taken, perhaps, by emotion, more than by reason", explains the consultant.

By: Carla Mendes | Notícias Agrícolas

This text was translated automatically from Portuguese.