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Cereals and oilseeds: "Prices will continue to decline"

February 28, 2020 3:58 PM, Der AUDITOR
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FRANKFURT. In the past few days, cereals and oilseeds have experienced downright price slumps on the stock markets. The effects of the Covid-19 epidemic are, however, also affecting smaller commodities.

Speculators are withdrawing from the markets, which has caused the prices of cereals and oilseeds on the CBOT to fall dramatically in recent days. Most people who trade on the stock exchanges are not interested in physical deliveries. The current uncertainty is therefore prompting these investors to move away from food commodities and towards other value investments such as gold. Market players reckon that investments will increase again once the situation eases. Nevertheless, it should take a while before that happens. "Here in Europe, we are only at the beginning of the epidemic. For the time being, it can be reckoned that prices will continue to fall over a longer period of time," one trader states.

For products such as sesame seeds, prices are directly linked to demand from China. The Chinese market obtains a large part of its unhulled sesame from African countries. At present, however, demand has collapsed. Since large quantities of sesame seeds are available in the African growing countries thanks to good harvests, prices are coming under pressure. To keep up with the competition, Indian sesame seed traders were also forced to cut their export prices significantly this week. However, market players tend to expect stable markets in the long term.

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