Soft Commodities: Cocoa Could Be Taking The Bullish Baton – Investing.com India

Soft Commodities: Cocoa Could Be Taking The Bullish Baton – Investing.com India

The article was written exclusively for Investing.com

The tidal wave of central bank liquidity began in early 2020 when the Fed cut the short-term Fed Funds rate to zero and began buying debt securities to the tune of $120 billion per month. As of August 2020, the monetary policy stance has not changed. Government stimulus in the trillions has been a tsunami over the past fifteen months. The current US budget and new stimulative initiatives, including infrastructure rebuilding and other programs, will continue even if the Fed tightens credit because of rising inflationary pressures.

The bottom line is that the inflationary seeds from monetary and fiscal stimulus have been blooming over the past year. Commodities are highly sensitive to the economic condition as inflation erodes money’s purchasing power, causing raw materials costs and prices to rise. , a leading inflation barometer, rose to a record high at $2063 in August 2020. While gold corrected, it passed the bullish baton to other commodities. Earlier this year, grain prices rose to over eight-year highs as , , and soared. In May, , , and reached new record prices. Energy prices rose to multi-year highs over the past months.

In July, the soft commodities