Coffee rallies on funds' rebalancing

Note: This section contains information in English only.
Source: Dukascopy Bank SA
Rural commodities were bullish on Monday amid worries over US crops and broadly softer US Dollar. Moreover, an expected increase in index funds holdings of the 2012 top laggards spurred rally of softs. Meanwhile, the investors' focus remained on this Friday's USDA report on global supply and demand estimates.

Wheat climbed on speculation that unfavorable weather conditions are weighting on US winter crops. As much as 25% of the hard red winter wheat may be lost after severe drought in 2012.

Corn bounced off a six-month low on signs that US reserves are approaching the lowest level in nine years after last year's drought. Experts predict USDA report scheduled on Friday to show that corn stocks dropped 15% as for December 1.

Sugar inched up on hopes that index funds will increase their sweetener's holdings. Investors are likely to purchase 31,451 contracts of sugar due to weighting shift of S&P GSCI and Dow Jones-UBS Commodity gauges.

Coffee rallied the most in the group, being boosted by expectations that index funds will buy as much as 11,148 lots of Arabica coffee as a part of their rebalancing plan.


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