It is time to take a look at the trends in the raw material market. Lets check the international oil price today. As of yesterday, the international oil price fell sharply today. WTI and Brent both fell around 7% amid expectations for a rate hike by the Fed and Russia-Ukraine negotiations, a decline in demand from Chinas coronavirus lockdown measures. Last week alone, it climbed to $130 a barrel, but it has fallen more than 27% from its highs and is now below the $100 level.
Next, lets look at the main grain prices. First, soybean futures are down 0.7%, trading at 1657 cents per bushel. Cotton is declining slightly. Cocoa is falling sharply today as it was yesterday. Today, it is down 3.6% to its lowest level in the last two weeks. It can be mainly explained by two reasons. First, cocoa production in Côte dIvoire has increased. As supply increased, the price fell. The Côte dIvoire government announced that cocoa production from October last year to the 13th of this month increased by 4.1% compared to the same period last year. Second, the Russian-Ukrainian war will reduce travel to Western Europe. In the chocolate market, the proportion of chocolate sold at airports is very large. As travel decreases, chocolate sales at airports are also expected to decline. So, the price of cocoa is falling.
Coffee is also running out. It is down 3.6%. The Ukraine crisis is also affecting the coffee market. Concerns that the global economy would deteriorate due to the war acted as downward pressure. This is because when the economy deteriorates, consumers coffee consumption also decreases.
Sugar was also down 2% and fell sharply today. This is due to the sharp drop in international oil prices. A fall in international oil prices leads to a fall in ethanol prices. Brazil is the worlds largest exporter of bioethanol from sugar cane. However, in a situation where the price of ethanol has fallen, there is no need for producers to produce much. Thus, the Brazilian sugarcane plant will reduce ethanol production and increase sugarcane pressing. In this way, the price of sugar is falling as the supply of sugar increases.
On the other hand, corn and wheat prices are rising in the market today. Corn is up 1.4% and is moving around 757 cents per bushel. Wheat prices soared 5%. This is because not only the war in Ukraine, but also the US, the worlds second largest wheat exporter, is expected to produce a wheat crop due to drought. According to Reuters, Southwest Kansas, the largest wheat producer in the United States, has had little snow or rain since October last year.
Lets look at the price of raw materials for metal. Nickel and tin are not open today. Lets start with zinc. It is up 0.7% and is moving around the $3839/ton level.
Copper is up 0.3% and is trading at $9964 per ton.
Aluminum is the fastest rising metal among commodities. It is up 2% and is moving around $3,390/ton. Lead is down 1% and is trading at $2325 per ton.
Lets check the gold price. As of yesterday, the price of gold is falling today. Likewise, the Russia-Ukraine negotiations have softened the preference for safe-haven assets. The upcoming Fed rate hike also acted as downward pressure. It is down 2% and is trading near the $1918 level. Finally, the silver price. The flow is similar to yesterday. It is down 0.8% and is trading near the $25 level.
So far, we have delivered the market conditions for agricultural products and metal raw materials.
Kang Soo-min Foreign Correspondent