Are we headed for a drop in food prices? The smart money sure seems to think so. There's a new report out from the Commodity Futures Trading Commission reporting that hedge funds have dropped their bullish speculative positions on agricultural commodities to their lowest level since September 2009. The Standard & Poor's GSCI Agricultural Index, which includes such things as wheat, soybeans and cattle, also reached a 14-month low last week.
What's the cause? It's not so much the worldwide economic turmoil as some record harvests. The planet's stockpile of wheat is expected to reach 202.58 million tons by June, which would be the highest it's been in over ten years. Corn and soybean reserves are also increasing.
Even cocoa, which had been in a years-long production slump, is turning around. Cocoa prices were at a 32-year high in March, thanks in large part to political unrest in Africa, where much of the world's cocoa is produced, but they've fallen off 45 percent since then. That will make your Christmas chocolate goodies taste all the sweeter.
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