Weekly Agriculture Roundup: Hot Cocoa

Like just about every other asset class, agricultural commodities have been on a wild ride over the last several trading sessions, fluctuating along with equity markets as investors have tried to evaluate the latest news out of Europe. The last week has generally been a strong stretch for agricultural and soft commodities, as a rally in stock markets and return to risky assets has created a wave of moderate optimism among investors.

The following table shows the performance of several popular commodity exchange-traded products for the week ended November 8. It should be noted that each of the funds included below utilizes futures contracts to achieve its stated objectives; as such, returns may not be reflective of changes in spot prices:

Ticker ETF Weekly Change*
DBA PowerShares DB Agriculture Fund +1.2%
CORN Teucrium Corn Fund +2.0%
SOYB Teucrium Soybeans Fund +0.3%
WEAT Teucrium Wheat Fund +3.5%
NIB Dow Jones-UBS Cocoa ETN +4.9%
JO Dow Jones-UBS Coffee ETN +2.7%
BAL Dow Jones-UBS Cotton ETN -1.0%
SGG Dow Jones-UBS Sugar ETN +2.5%
COW Dow Jones-UBS Livestock ETN -0.2%
*Week ended November 8

The jump in cocoa prices in the able above is noteworthy; farmers in the Ivory Coast, the world’s largest producer of cocoa, have been holding back a portion of their crops in hopes of getting customers to pay higher prices. Reforms passed by the Ivory Coast government have also impacted this commodity; as part of legislation passed last week, cocoa farmers in the country will now be guaranteed a portion of the international price of cocoa. Buyers in European markets have been consistently paying a premium over London futures prices for Ivorian cocoa over the last month.

Coffee prices have also been on the rise in recent sessions, and wheat prices have shown signs of strength as well as the broader markets have climbed higher. One weak spot during an otherwise impressive week for agricultural and soft commodities was cotton; futures fell to a three-month low after a report was released showing that U.S. export sales have been sliding. After markets closed on Monday, a report from the USDA showed that cotton inspected for export at U.S. ports was 170,930 bales for the week ended October 27, down more than 55% from the previous week. The report also showed that the U.S. cotton harvest could come in ahead of schedule and with a higher-than-average total.

Livestock prices eased a bit over the last week after a furious run-up thanks to surging demand from overseas. COW slipped slightly over the course of the last week, but is still up close to 3% over the last quarter. A number of restaurants have cited rising cattle costs as a drag on profitability in earnings reports, and the possibility of further easing to import restrictions from Japan looms as a potential catalyst for a further surge.

Disclosure: No positions at time of writing.

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