Top 3 Commodities to Monitor This Week

Key Points:

• Cocoa futures soar due to poor harvests in Ivory Coast and Ghana.
• European gas futures stay elevated amid regional tensions.
• Gold prices influenced by Federal Reserve’s hinted rate cuts and bullish technical patterns.

This week’s focus turns to cocoa, European gas, and gold, each influenced by distinct market factors that could drive significant price movements.

Cocoa:

Cocoa futures have surged to an all-time high of $9,400 per ton, marking a 45% increase in March. This unprecedented spike is driven by poor harvests in key producing countries like Ivory Coast and Ghana. Adverse weather conditions, including heavy rains from El Niño followed by extreme heat, have resulted in significant supply shortages. The Ivory Coast cocoa regulator anticipates a 33% decrease in production, dropping from 600,000 MT to 400,000 MT. These supply concerns are expected to keep cocoa prices elevated in the near term.

European Gas:

European natural gas futures are trading near €29/MWh, maintaining levels not seen since early February. This stability is attributed to regional tensions following recent attacks on energy facilities in Russia and Ukraine, exacerbating supply concerns. Although these prices might ease as Europe transitions out of the heating season, the ongoing conflict and potential for further disruptions keep the market on edge.

Gold:

Gold’s price trajectory is heavily influenced by the Federal Reserve’s monetary policy signals. Last week, the Fed maintained its expected 75-basis point reduction in the Fed Fund rate for this year, consistent with previous communications. This contributed to gold reaching a new all-time high before a subsequent pullback. Technical analysis suggests a potential bullish pattern forming, with the possibility of gold surpassing $2,200/oz. and testing the all-time high near $2,225/oz., while maintaining support levels around $2,150/oz. Traders should watch for further movements influenced by upcoming economic data and Federal Reserve statements.

These three commodities—cocoa, European gas, and gold—are poised for significant market movements this week, making them essential to watch closely for potential trading opportunities.