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Possible Bottom in Soft Commodities

By January 20, 2013

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The soft commodities have trended lower for about two years, but a bottom might be in sight.  Coffee and sugar prices have lost about 50 percent in the last two years and the downside may have have run its course.

The soft commodities are often considered the more agressive of the commodities complex.  They tend to move much faster and farther than most people expect. This has been apparent on the downside and the cycle could be reversing.

Lumber was the biggest gainer last year.  The fundamentals don't look great right now for the softs, but they never do at long term reversals.  There is more of a sentiment that the global economy will turnaround and that would be very positive for the softs.

Many of these commodities are grown in Brazil.  They have had good growing conditions the last couple years, but there are bound to be some disruptions in these commodities in the near future.  The softs are mostly grown in tropical climates and weather issues regularly happen.  That could go in conjuction with an improving economy and make these commodities look like a great value.

Comments
January 22, 2013 at 1:19 pm
(1) VB says:

Another bloodbath in the soft’s…..

January 23, 2013 at 5:56 pm
(2) Eric says:

Silver must be the greatest value of them all! Found some interesting facts and graphs about silver’s value.

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