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Agricultural markets fell as crude oil plunged following a Saudi-Russia price war, with sugar down as much as 6.5%, palm oil down 11%, and European rapeseed down more than 3%. Shares of U.S. ethanol maker Green Plains dropped 43% and fertilizer producer Nutrien hit an all-time low.
Lower crude prices weaken the biofuel demand link for corn, sugar, vegetable oils and rapeseed, pressuring farm commodity prices. Lower energy costs also weigh on the outlook for fertilizer and ethanol margins.
proag.comMar 11, 2020After 565 past bearish macro events, Crude Oil (WTI) moved a median -1.4% over 5 sessions (41% higher; middle half -5.9% to +3.0%), and -0.5% over 20.
After 312 past bearish macro events, Crude Oil (Brent) moved a median -1.7% over 5 sessions (38% higher; middle half -5.4% to +2.3%), and -1.7% over 20.
After 301 past bearish macro events, Corn moved a median -0.1% over 5 sessions (47% higher; middle half -2.2% to +1.3%), and +0.2% over 20.
After 51 past bearish macro events, Palm Oil moved a median -1.3% over 5 sessions (35% higher; middle half -4.1% to +1.1%), and -1.8% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
On March 9-10 crude's crash on the Saudi-Russia price war pulled palm oil down about 11%, which weakens the biodiesel link and sentiment and falls squarely in the 5-day window.
Ag markets, including palm oil down 11%, fell with crude after the price war; palm is a close soyoil substitute, so its drop transmitted to soyoil.
