COMMODITY CRACKLES : OLIVES & OIL, SUGAR & MILK

Stock up on olive oil ! Prices have been on the uptrend since mid 2014 as crops are ravaged by disease in Spain and Italy. Greece looks like it has a trump card at this rate producing some of the finest olive oils in the world.

It really depends on what oil you invest in, doesn’t it ? Olive oil or crude oil ? Both with vastly different fortunes since mid 2014.

OLIVE OIL VS WTI

Agriculture commodity prices have had a good run in the past month as we have advocated in early June although Sugar has not budged much.

“I have turned bullish on soft commodities and hope to see AIGA (ETFS Agriculture) back above US$6 in the coming months and optimistic on sugar futures as well.” https://tradehaven.net/market/commodity-crackles-oil-and-weather-elements/

AIGA LN which I had favoured at $5.5 level, broke above $6 on the 1st of July, yesterday, and is looking set to consolidate at these levels which looks measly compared to the one day swings of the Chinese stock market !

aiga ln 1m

This coincided with the biggest drop in oil prices since April as inventory numbers released by the EIA showed a glut in inventories.

wti price

Since the break out in April that I was bullish about, we have been in a nice range for crude prices till now. https://tradehaven.net/market/commodity-crackles-lets-start-with-oil/

I suspect that speculative interest is waning fast as we see trading volumes fall in the recent weeks, the monies probably deployed to more exciting and volatile markets.

Yet the outlook is not that bad for the oil horizon, if we look at the oil curve which flattens out at just under $70 in a contango. That is healthy compared to the oil curve this time last year.

OIL CCRV

Thus it would do well to look to pick up oil under $55 (maybe , which was my target in April and get a few extra bottles of olive oil along with it.

Not as lucky as the olive growers are milk farmers with their cows although the Kiwis are lucky now that their currency is on freefall which boosts revenues in their local dollar though not quite sufficiently because the last time the milk prices were at this level back in 2009, the NZDUSD was well under 0.60 cents.

NZD VS MILK

I am not seeing any benefit from this even as we drink about 4 litres a week, between the kid and I. Margins are probably retained by the milk consortiums !

Starbucks is not getting cheaper even with Coffee prices down 25% on the year so far along with the pack of Sugar that comes with it, that has fallen 15%.

milk coffee sugar

I am still bullish on the Sugar idea of mine last month at its all time lows (for the ETF SUGA LN) and its up slightly at the moment.

suga ln

We should be able to see prices break higher with global production forecasts short of demand in the next season and the second half of the year with many sweet festivals eg. mooncakes ? Divali and X’mas ?

Good Luck !