SUPERNEWS

Macro

Cocoa Dives 7% on Rain Boost & Hedge Fund Cuts

Gold hits record levels as Newmont leads with 6.93 million ounces; Cocoa prices swing amid volatility, copper demand surges for EVs.

By Barry Stearns

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4/29, 06:35 EDT
S&P 500
iShares 20+ Year Treasury Bond ETF
iShares 7-10 Year Treasury Bond ETF
BHP Group Limited
Barrick Gold Corporation
GOLD
Newmont Corporation
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Key Takeaway

  • Cocoa futures dropped up to 7% to $9,850 a ton due to improved mid-crop outlooks from rains in West Africa.
  • Hedge funds cut their net-long cocoa positions to the lowest in over a year, per Commodity Futures Trading Commission data.
  • Despite cocoa's slump, both arabica and robusta coffee prices rose in New York and London markets.

Gold and Oil Markets Surge

Gold prices have reached record levels, with Newmont Corp., the world's largest gold producer, planning to produce 6.93 million ounces this year after acquiring Newcrest Mining Ltd. for $15 billion. This acquisition positions Newmont at the forefront of the gold production industry, with Barrick Gold Corp. also expected to announce its production plans soon. The surge in gold prices reflects a bullish outlook in the precious metals sector. Meanwhile, the Trans Mountain pipeline expansion in Canada is set to begin commercial operations, potentially shifting global oil flows by transporting an additional 590,000 barrels of oil per day from Alberta to the Pacific Coast. This project, acquired by Prime Minister Justin Trudeau's government, aims to redirect oil flows from California to China, marking a significant change in global energy distribution.

Cocoa and Copper Demand Fluctuates

Cocoa prices have seen extreme volatility, with the potential to reach $15,000 a metric ton, marking the most significant price swings since the 1970s. This volatility has led to decreased market liquidity and heightened price fluctuations. In contrast, copper demand is surging, driven by the needs of electric vehicles (EVs), grid infrastructure, and data centers. BHP's $39 billion bid for Anglo American Plc highlights the critical need for increased copper production to meet this burgeoning demand. However, the industry faces challenges in securing the necessary investments, with over $150 billion needed by 2032 to address the supply gap.

Energy Storage and Diesel Dynamics

The global energy storage market is poised for rapid expansion, with the Asia Pacific region leading growth. This market boom is supported by government mandates and subsidies aimed at transitioning away from fossil fuels. Conversely, the diesel market is experiencing a downturn, with consumption in the US near a seasonal low. This decrease in diesel demand could impact crude prices if the trend continues, underscoring the interconnectedness of global energy markets.

Street Views

  • Analysts at Hightower (Neutral on Cocoa):

    "A shift towards wetter weather over West African growing areas should provide some benefit for the region’s upcoming production."