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Bulls in the grain and soy markets are not going to surrender without a fight as we are witnessing general strength across the complexes this morning. That said, we are realistically doing little more than running in place. Do not take me wrong, I am fully situated in the camp that believes we have all the pieces in place for what potential will be an exciting summer in front of us but we remain early enough in the season, and there are enough other less than favorable factors that we are contending with right now to suggest it may be a bit early for extended upside excitement. Let us not forget that patience is one of the seven heavenly virtues, but gosh darn it, sometimes it is just so difficult to wait for it.
As it turns out, there has been one commodity market as of late that has been witnessing quite a rally and this one is personally is raising my anxiety level several notches. After a stretch of unseasonably dry weather, the pendulum has swung to the other extreme, and the Ivory Coast of Africa has been drenched in recent weeks. The fear now is that early stress, and now the excessive rains could literally rip the precious fruit that grows there right from the tress before it has even had a chance to ripen. Of course, I am talking about that most prized of raw commodities; Cocoa. The most recent, and distressing forecasts now predict that supplies will move from surplus to deficit and this as global demand continues to grow for this critical crop. The price of cocoa, like a number of commodities, had turned higher shortly after the beginning of this year but these recent problems have now pushed us into price territory not seen since late 2016, and there is no sign of stopping yet. Granted, the average American consumes around 10 pounds of chocolate per year but for those of us who have recognized the “medicinal benefits” of this product such as it being heart healthy (mayo clinic) are probably more in line with the Swiss who consume around twice that much annually. Unfortunately, it would appear that the horses have already bolted from the barn so closing the doors now may not help much. I guess I will just have to plan on spending a bit more for “healthcare” in the months ahead.
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