Wheat plunges ahead of index funds rebalancing

Source: Dukascopy Bank SA
© Scanpix/Reuters
Farm commodities were mixed on Wednesday, with softs ending higher and grains sliding. Improved risk appetite after the US lawmakers agreed on fiscal reform supported rural commodities. However, signs of weak demand for US exports, firm US Dollar and upcoming index funds' rebalancing continued to create pressure on grains.

Wheat tanked to a six-month low on preparation for index funds sales due to start on January 5. Meanwhile, wheat futures may seek support on the US drought concerns and unfavorable weather conditions in Argentina.

Corn sagged 0.47% ahead of index funds' rebalancing due to begin on January 5. At the same time, the downswing was capped as rains in Argentina are slowing down harvesting in the country.

Sugar was among gainers, attaining almost one-month high amid US optimism.  Restricting the upswing, Indian sugar output jumped 2.5% year on year in the period between October and December, reported Indian Sugar Mills Association.

Coffee was the top-performer as a sharp decline in prices in 2012 is expected to foster buying from index funds amid year-end rebalancing.


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