The March contract in sugar futures was up just above par, inching up .05 percent to 19.25 a pound at the close of the day at the ICE exchange in New York. Last Friday, the same contract settled at 19.12 a pound while currently trading at 19.24 up about 12 points for the trading week in a very nonvolatile trading manner as the holiday season is certainly upon us.
The remainder of the softs sector in commodities futures markets was mixed, with March orange juice futures closing down 4.05 percent at 201.35 as some market participants had been waiting for a sell-off in OJ futures. The same contract month in coffee futures was up 1.90 percent at 142, while March cocoa futures ended the session 3.23 percent higher at 2,240.
Most commodities futures market participants are awaiting the start of tomorrow’s Federal Open Market Committee meeting on Tuesday. Although a rate hike on Wednesday is all but priced in, there is always the possibility of surprise. The probability that the FOMC will increase its fed funds rate at the December 13-14 meeting is nearly 100 percent, compared to a 68 percent possibility in early November. Analysts say to expect more rapid inflation in commodities futures prices, which could become more of a bearish factor. Some analysts say to wage inflation in commodities futures markets will increase substantially above the consensus view.
Economists also predict that Fed Chair Janet Yellen, in her press conference on Wednesday, will warn markets to calm down and that the U.S. economy still has “room to run”.
In addition to the FOMC decision, the week’s economic calendar contains a slew of reports of note to the commodities futures markets, including November Import and Export Prices released on Tuesday.
Other significant reports include but are not limited to November Retail Sales, due on Wednesday, as well as the Producers Price Index for the same month. The November Consumer Price Index is on the calendar and Housing Starts and Building Permits for the same month are also slated for release.