Dollar strength weighs on agriculturals

Strong US employment data and statements from members of the Federal Reserve in recent weeks have combined to bring forward investors’ expectations for the first US rate hike to December. The resulting strengthening of the US dollar has been a factor weighing on the prices of agricultural commodities since the middle of last month.

Indeed, the prices of nearly all of the major agricultural commodities have fallen since mid-October, with cocoa and sugar the two exceptions. Worries about dry weather in Côte d’Ivoire have bolstered cocoa prices, whereas positive production expectations have contributed to the falls in the prices of grains and oilseeds. Weak US export data have also put downward pressure on the prices of key grains.