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Monday, Aug. 29, 2016

Cocoa Melts Lower

Posted Friday, April 6, 2012, at 4:44 PM

Cocoa prices fell sharply this week, plunging to a three-month low on Wednesday, just in time for the Easter Bunny's visit. Favorable rains in the Ivory Coast, home to thirty percent of the world's cocoa production, increased prospects that an abundant harvest could hit the market in the coming months.

Prices have also been weighed down by record cocoa storage levels at the International Continental Exchange, the center of U.S. cocoa trading. The ample supply situation stands in sharp contrast to the global shortage projected last March, when cocoa prices shot to a 35-year high at $3,826 per metric ton. With cocoa worth only $2,085 per metric ton at the end of the week, prices have fallen 45 percent since last March.

Wheat Prices Wane

After surging last Friday alongside corn and soybeans, wheat prices dropped sharply as the market refocused on wheat's overall weak outlook. Unlike corn and soybeans, which could face a critical shortage in the coming years, wheat supplies remain plentiful worldwide. Major wheat-producing nations like India, Russia and Australia are projecting large crops this year, pressuring prices lower. By the close of trading Thursday, wheat for delivery in May had fallen to $6.38 per bushel, down 22 cents (-3.3 percent) on the week.

Despite the supply overhang, some analysts warn that wheat prices should not fall much more below corn, which is currently worth $6.58 per bushel. The two often move in tandem, as both can be used as livestock feed, allowing cattle, hog and poultry producers to focus on buying the cheaper grain.

Gold Sinks Lower

Gold prices dropped sharply this week, falling to $1,613 per ounce, the lowest price in nearly three months. The selling was prompted by signs that the Federal Reserve would not extend economic stimulus, eroding some of gold's charm. Over the last few years, "gold bugs" have touted government stimulus as an inflationary influence that could push gold prices higher, and the fear that the government may begin weaning the economy off of stimulus shocked the gold market lower. By the close of trading on Thursday, prices were steadier, trading near $1,630.

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Commodity Futures File
Alex Breitinger
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Alex Breitinger, a 2009 graduate of DePauw University, is a commodity futures broker with Breitinger & Sons, LLC in Valparaiso. He can be reached at 800-411-FUTURES (3888) or online at www.indianafutures.com.
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