Commodity Futures Fall Amid Concerns Over the New COVID-19 Variant

Oil prices drop to July levels

Oil prices dropped to their lowest daily level since July 2021. Adding concern over the new COVID-19 variant has spooked investors, with oil production could yield a surplus that could further suppress oil prices. According to the Dalian Commodity Exchange, the most-active soybean oil contract dropped by 0.8%, while that of palm oil fell by 2%. Palm oil prices are impacted by price fluctuations in other competing oils in the global vegetable oils market. According to the Bursa Malaysia Derivatives Exchange, the benchmark February palm oil contract closed with a 1.54% decrease, falling to USD 1,144.91 per tonne.

Cocoa fall to a four-month low

According to the Intercontinental Exchange (ICE), on Nov. 26, cocoa futures dropped to the lowest levels since July. March New York cocoa closed down by 4.7%, dropping to USD 2,396 per tonne, the lowest level in four months. Despite the global cocoa market experiencing increased demand lately, the latest COVID-19 variant has further suppressed prices. Cocoa has been heavily impacted by COVID-19, as chocolate consumption fell without social events, traveling, and conferences. March London cocoa futures dropped by 3.6% to around USD 2210.85 per tonne, another four-month low.

Sugar future drop to October levels

March raw sugar contracts closed down 2.8% at USD 0.19 per lb, dropping from the four-and-a-half-year high USD 0.21 set last week. Sugar futures have fallen to their lowest point since October. March white sugar futures dropped by 1.9% to USD 501.40 per tonne, close to a two-month low.

Coffee futures drop following 10-year high

March arabica coffee futures dropped by 1% at USD 2.429 per lb on Nov. 26, following a 10-year high of USD 2.482 on Nov 27. Coffee was less impacted as the market continues to benefit from diminishing exchange stocks as exports from South America are delayed due to a container shortage and a reluctance of growers to sell. January robusta coffee contracts increased by 0.8% to USD 2,308 per tonne due to delayed harvesting in Vietnam, the world’s leading robusta producer.

Prices settle as the period of uncertainty continues

On Nov. 29, global markets gained composure as investors settled in for a period of uncertainty over the economic impact of the new COVID-19 variant. Oil prices increased, making up for losses suffered on Nov 26, as investors sought after bargains while remaining cautious over developments on the Omicron coronavirus variant. According to CBOT, on Nov. 29, the most-active wheat futures rose by 1.3% to USD 8.51 a bushel by 0302 GMT, after closing down 1.2% on Nov. 26; and the most-active soybean futures increased by 1.2% to USD 12.67-1/4 a bushel, having closed down 1.1% on Nov. 26.

Sources:

• Reuters. “New COVID variant scares markets, corn rebounds.”
  
• Reuters. “Oil settles down $10/bbl in largest daily drop since April 2020.”
  
• Agricensus. “Soybean commentary: Futures plunge on fears about new Covid 19-variant.”
  
• Agricensus. “Wheat commentary: Futures slide amid renewed Covid strain fears.”
  
• Agricensus. “Vegoils commentary: Palm and CBOT drop on sell-off, covid-19 concerns.”
  
• CBS News. “Stock futures tumble on fears over new coronavirus variant.”
  
• Nasdaq. “VEGOILS-Palm oil clocks near 3% weekly loss as crude, Dalian prices weaken.”
  
• Nasdaq. “SOFTS-Cocoa dives to 4-month low on fresh COVID fears; sugar hits 1-month low.”
  
• CNBC. “New Covid variant roils global markets with oil sinking 5%.”
  
• The ICE. “London Cocoa Futures.”
  
• The ICE. “White Sugar Futures.”
  
• Trading Economics. “Soybeans.”
  
• Reuters. “GRAINS-Wheat jumps 1%, new COVID-19 variant looms over market.”