Traders High on Coffee and Sugar

Coffee and sugar prices were the most energized commodities out of all agricultural markets this week. Better demand, reflected by stronger U.S. GDP, stimulated buying from speculators. Global demand, which is also on the mend, helped Arabica coffee futures gain ground. Weather problems in South and Central America have caused coffee stockpiles to remain low. Sugar prices will now largely depend on India’s sugar production, which will be affected by weather there.

Commodity Currencies Climb Past Dollar

The Austrian dollar and Canadian “Loonie” fared well this week. Those two countries benefited from increasing demand for their plentiful natural resources, such as crude, natural gas, wheat, livestock, lumber and metals. Their relatively low population densities also remove demand for government spending, which can strengthen their paper currencies and currency futures contracts.

Red Metal the Hottest

Copper, the “red metal,” made highs throughout the week. Gold and silver rose as well. Platinum was the anomaly and continued to drop. Demand for catalytic converters, which contain platinum, may also decline as internal combustion engines fall from favor. This rally in copper is, indeed, related to increased demand from all things electric, including autos, batteries, solar energy farms and windmills. It’s also related to predictions of massive increase of transmission lines to move the power to consumers. Copper and lumber also benefited from expectations that the Federal Reserve will reduce the pace of interest rate increases in February. Silver is the best metal for conducting electricity, followed by copper, gold and then aluminum.

Weekly Movers

High fliers included March coffee closing at $1.6725 per pound, sugar at 21.02 cents, lumber at $506.60 per thousand board feet and copper at $4.23 per pound. Midday, the March Canadian dollar was worth 75.15 cents. The grains were slightly higher with March corn finishing the week at $6.84 per bushel, March beans at $15.14 and March wheat at $7.50. Cattle were slightly higher but hogs slightly lower.

The biggest loser this week was March Heating oil (diesel fuel) at $3.18 per gallon, down over 20 cents.