Commodity markets had a tough time rallying due to outside market movement including a 10-week high for the dollar.
“This past week especially, a lot of the market movement had more to do with the dollar movement and foreign currency movement than fundamentals,” says Chip Nellinger of Blue Reef AgriMarketing.
Issues coming out of Europe, including the possibility of more quantitative easing, combined with the possibility of raising interest rates in the U.S. caused “wild fluctuations” in the dollar resulting in a halt for the commodity markets according to Nellinger.
“As that market strengthened sharply mid-week this past week,” he explains, “It capped all our commodities.”
Nellinger says commodities affected include corn, soybeans, wheat, crude oil and cotton.
“It [the commodity market] stopped dead in its tracks as the dollar started rallying,” he says. “We ended up lower for the week in those commodities.”
Nellinger expects the dollar to not only affect the grain markets, but all commodity markets. And the market shifts he’s referring to, he says they are pretty significant.
“It’s not small moves we’re not talking about,” Nellinger emphasizes. “We’re talking about massive swings in the course of three or four days.”
This scenario could possibly be the case for the next 45-60 days and could impact export markets he adds saying, “Unfortunately the outside markets and the dollar are a huge, huge influence.”
Watch Chip Nellinger discuss the outside markets with “AgDay” host Clinton Griffiths in this AgriBusiness segment of AgDay: