Commodities Futures and Options Brokerage


Paragon Commentary

Futures File: Coffee, Silver & USDA

May 22, 2020

Coffee Crash

Coffee prices dripped to a three-month low on Friday, trading under $1.03 per pound.

The commodity has been extremely wild during the COVID-19 pandemic, with five moves of 20%+ so far this year.

Demand and prices surged as Americans hoarded groceries, including their daily caffeine fix, pushing prices near $1.30 per pound in March. Over the last few months, demand has been falling as consumer use up supplies at home.

Meanwhile, the Brazilian currency, the real, has fallen to record low prices. Brazil is the world’s second largest coffee grower, and as its currency collapses, it pulls down prices of Brazilian-produced commodities, like sugar, soybeans, and coffee.

Despite the current low levels, economists warn that market jitters could send coffee flying high again. Brazil’s currency is tanking due to a worsening coronavirus outbreak that could threaten coffee supplies.

 

Silver Linings

In the midst of a general market malaise, silver recently became one of the few commodities to reach a breakeven for the year, topping $18 per ounce on Wednesday.

Prices are now up more than 50% from their mid-March lows, a sign of how drastically investor sentiment has surged during the last two months.

The “silver rush” has proven more urgent than the gold buying as investors seek both safety and profits during economic uncertainty. Silver is both a safe haven and industrial commodity, helped by low interest rates, speculators and conservative investors, alike. As of midday Friday, July silver futures traded for $17.65.

 

USDA Announces Farm Aid

The U.S. Department of Agriculture announced the details of a much-anticipated farm aid program this week. Under the Coronavirus Food Assistance Program, U.S. farmers stand to receive compensation for market losses they took due to the coronavirus outbreak and supply chain disruption. Payments are available across a wide range of crops and animals, with amounts varying by the size of market losses.

In this column, we’ve highlighted hard-hit markets that are now seeing support. Dairy farmers can receive over 6 cents per pound for milk produced during the first quarter. Livestock producers may receive funds for each animal they sold during the crisis, amounting to over $100 per head for cattle and $18 per head for hogs. Row crop farmers stand to receive $0.67 per bushel for corn and $0.95 per bushel for soybeans they sold during the downturn.

Producers can reach out to their FSA office for more details.

1 (888) 452-8751

Paragon Investments, Inc.

Kansas • Missouri • Nebraska •
Indiana • Florida

 

DISCLAIMER: Past performance is not necessarily indicative of future results and the risk of loss does exist in futures trading. Trading commodity futures and options involves substantial risk of loss and may not be suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Opinions, market data, and recommendations are subject to change at any time. This brief statement does not disclose all of the risks associated with trading commodities, futures, and options. For more information, see Disclaimer/Legal statements. The information contained on this Web site does not constitute a solicitation to buy or sell by Paragon Investments, Inc.. This Web site is not to be available to individuals in a jurisdiction where such availability would be contrary to local regulation or law. Paragon Investments, Inc. © 1997-2013 No Claim to Orig. U.S. Govt. Works.

© year Paragon Investments, Inc.