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As you finish your entree at your favorite restaurant, the question inevitably arises: should I order dessert?  Or if you’re less responsible like me, the question is what type of dessert should I order?

For better or worse, as broker of commodities, I tend to see my world through that lens.  When it comes time for dessert, there are three commodities that come to mind (among many others tangentially involved): Cocoa, Coffee and Sugar.  These three are some of the mostly highly traded and consumed commodities in the world.  And my dessert experience would be seriously lacking without them!

As of late, we’ve seen strong trends in each of these markets.  Both Coffee and Cocoa have seen strong bull moves, while Sugar is trending down.  What causes these moves?  Generally speaking, long-term changes in price are driven by market fundamentals: supply and demand.  Weather is one primary factor that affects the supply of agriculturally based commodities.

Bloomberg has recently produced informative articles and videos about the fundamental factors behind these long-term trends.  Sugar is seeing year-over-year increases in global supply.  Weather is negatively affecting the Cocoa crop in Indonesia.  Similarly, freezing temperatures are changing the outlook for Coffee in Brazil – the world’s largest producer of Arabica beans.

Click on the links above for further information.  We’ve also included price charts of each commodity courtesy of OEC Trader. (Click on the image for a larger view.)

Finally, as your broker, we encourage you to ask the natural questions that arise from these charts.

  • How can I utilize these markets to spread out my investment risk?
  • What are the most risk-effective ways to be long or short these markets?
  • How does my risk/reward picture change if I sell credit option spreads as opposed to using outright futures?
  • How can I most effectively take advantage of a counter-trend move?
  • What managed futures programs have foreseen and taken advantage of these trends?

As your broker, we will gladly give our opinion on these markets.

Now, what should I order for dessert?

Sugar Chart:

March 2014 Sugar Futures

March 2014 Sugar Futures

Coffee Chart:

March 2014 Coffee Futures

March 2014 Coffee Futures

Cocoa Chart:

March 2014 Cocoa Futures

March 2014 Cocoa Futures

The Foremost Trading Team

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Disclaimer: Trading futures, options on futures, retail off-exchange foreign currency transactions (“Forex”), investing in managed futures and other alternative investments are complex and carry a risk of substantial losses. As such, they are not suitable for all investors. This website contains information obtained from sources believed to be reliable, but such information has not been independently verified and its accuracy is not guaranteed by Foremost Trading. Past performance is not necessarily indicative of future results. Any mention of performance in any context whether actual or hypothetical is no guarantee of future results. Foremost Trading became a registered ‘dba’ of RCM Alternatives in July of 2020. Please see full disclaimer here: https://www.rcmalternatives.com/disclaimer/