Coffee witnesses gains from oversold sentiment

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Source: Dukascopy Bank SA
Rural commodities apart from sugar surged on Friday despite soft demand for riskier assets amid US fiscal uncertainty. Short-covering and signals that farm commodities entered into oversold territory pushed the commodity group higher. However, weak US exports, upgrades of Brazilian crop estimates and firm US Dollar created notable pressure on rural commodities.

Wheat inched higher despite year-end liquidation and preparations for fund and index rebalancing.  Favorable weather in the US major wheat-growing regions as well as weak demand for US supplies also weighed on the commodity.

Corn advanced as a recent fall in prices spurred short-covering. Moreover, rains in Argentina that are slowing down harvesting provided some support for grains.  However, soft demand for US exports continued to cap gains.

Sugar was steady as rising Indian imports offset concerns over ample global supplies as well as pressure from solid greenback.

Coffee jumped as Brazil's officials claim that recent crop forecasts upgrades may have driven coffee prices artificially low.


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