There’s nothing like some bad weather in South America to get the markets humming. Due to potential crop damage, Sugar, Soybeans and Coffee have shown tremendous gains in the last few months. Soybeans are particularly interesting because its market has gone from a contango to an inverted market. This means that participants in the market are willing to pay more for the front month futures contract then for the next month. Typically this is a sign of a shortage or, at minimum, a willingness to take delivery now and take advantage of a product’s availability. Neither Sugar nor Coffee had inverted markets, although Sugar is very close. Since April 6th, when all three contracts were in a bit of a trough, Sugar’s October contract has increased 32%, while November Soybeans is up 25% and Coffee’s September contract is 13% higher.
|