Softs are rocking

Air Risk

A day after Ukraine accused Russia of shooting down Ukrainian warplanes and after the downing of a Malaysian passenger plane another plane has gone missing.

Reports overnight that Spain's Swiftair lost contact with an Airbus A320 plane that had 116 people aboard en route from Ouagadougou in Burkina Faso in Africa to Algiers may bring terror premium back into the market. Gold (COMEX:GCQ14) which had been selling off after Asian markets railed after strong Chinese data are bounced off lows the nervousness regarding the Swiftair incident. Oil price are backing off after yesterday's supportive Energy Information Administration report.

Copper popped up on Chinese data. Markets want to try to focus on economics but the volatile geo-political situation continues to get in the way. 

The EIA reported that crude inventories fell by almost 4 million barrels as refiners ran wild and gasoline demand seemed to pull back. Gasoline (NYMEX:RBQ14) inventories jumped by 3.38 million barrels three times more than the average estimate. Distillate inventories rose by 1.64 million barrels.

In China a pop in the preliminary Purchasing Managers' Index from HSBC Holdings Plc and Markit Economics may help global oil demand expectations. The reading came in at 52 higher than market expectations.

Tropical Depression Number 2 is weakening. The National Hurricane Center says that disorganized  thunderstorms moving westward over portions of the Lesser Antilles are associated with the remants of Tropical Depression Two. There are no signs of a surface circulation, and environmental conditions are not conducive for re-development of this system as it moves west-northwestward at about 25 mph. Showers and gusty winds are possible through much of the day, especially on the islands of Guadeloupe, Dominica, Martinique and St. Lucia.

The soft markets are rocking with cocoa and coffee (NYBOT:KCU14) leading the way. Bloomberg News reported that cocoa futures rose to a three-year high as heavy showers in West Africa boosted concern that harvests won't meet rising demand, signaling higher costs for chocolate makers. As much as triple the normal amount of rain fell in the past month in Ivory Coast, the world's top grower, and Ghana, the second-biggest. That increased the chances of disease and deteriorating crop quality, according to Gaithersburg, Maryland-based MDA Weather Services. 

Futures have jumped 18 percent this year as chocolate consumption rose in Asia and North America. World demand for confections and cocoa products has doubled in the past 20 years, and farmers are struggling to keep up, Kevin Petrie, the chief procurement officer for Nestle USA Inc., said this month. Hershey said last week that it was raising wholesale prices by 8 percent, citing higher ingredient costs.

About the Author
Phil Flynn

Senior energy analyst at The PRICE Futures Group and a Fox Business Network contributor. He is one of the world's leading market analysts, providing individual investors, professional traders, and institutions with up-to-the-minute investment and risk management insight into global petroleum, gasoline, and energy markets. His precise and timely forecasts have come to be in great demand by industry and media worldwide and his impressive career goes back almost three decades, gaining attention with his market calls and energetic personality as writer of The Energy Report. You can contact Phil by phone at (888) 264-5665 or by email at pflynn@pricegroup.com. Learn even more on our website at www.pricegroup.com.

 

Futures and options trading involves substantial risk of loss and may not be suitable for everyone. The information presented by The PRICE Futures Group is from sources believed to be reliable and all information reported is subject to change without notice.


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