Coffee, Cocoa, Sugar. The Declining Cost of Comfort Foods: Expected or Unexpected?
March 11th, 2010
I haven’t posted as many blogs this past week and, instead, thought I’d explore a seldom examined aspect of following commodities and write more extensively on that subject.
Seasonal Trends.
Today’s topic is the declining cost of Coffee, Cocoa and Sugar on the world trading stage.
These aren’t the only declining markets out there, but, as many markets are rising at present, these are noteworthy because of their contrary behavior to the rest.
But, is that price behavior as significant as we hope it is?
We’ll look into this further in this blog.
Let’s get a visual clue as to what I’m talking about using our charts:
Coffee's declining prices add a little more comfort in every cup.
Then there is the chart for Cocoa:
Chocolate in every one of it's sweet forms should be declining in the near future.
I’m most pleased by this development as I’m a big fan of chocolate. Of course, it may take a while for retail prices to reflect the underlying real costs as there’s lots of inventory to go through first, but, eventually, we’ll all be having a great example of price deflation in handy, bit-sized pieces.
But, wait. What good is coffee or cocoa (chocolate) without a little sweetening in the mix?
So, that takes us to another basic commodity that is plummeting in price now and that’s Sugar.
Sweet! Sugar prices are dropping too.
Another declining market in a basic consumable, Sugar, bodes well for the general economy of homemakers.
Let’s take a look now at what we should expect from these commodities.
To do that, we need to know the Seasonal Tendencies of each of these markets averaged over many years time.
I’ll discuss those tendencies in the blog that follows which can be seen by the Members of the Money Tigers Group only.
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To continue with the summary of our member’s information:
The past, as we’re forced to say, does not equal the future and that certainly is the case with Seasonal Charts.
An unusual year can throw off your best-laid plans no matter how many years one has averaged price for a market.
So, my suggestion is to give Seasonal charts their proper weighting and don’t view them as a crystal ball.
Confirm what they say is ‘normal’ with today’s reality check which is today’s charts and a sound analysis of what those charts are telling you about the markets.
Do they confirm a ‘normal’ seasonal chart or are they telling you something else is happening this year?
Hope you’ve found some food for thought here.
Have a great weekend and stay tuned for additional shorter-term forex commentaries. – George
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