What is happening with cocoa, wheat, soybeans, orange juice prices?

Agricultural commodities have been in the spotlight this month as investors focused on the recent hurricanes in the US and weather-related events. There are also concerns about the upcoming American election and its impact on key commodities like soybeans and wheat. 

Soybeans price analysis

Soybeans continued its strong downward trend this week, reaching a low of $9.7, its lowest level since September 2020. It has dropped by about 44.2% from its highest level this year. 

The main catalyst for soybeans will be the US general election and the rising odds that Donald Trump will win a second time.

Polymarket, the popular prediction market, has placed his odd of victory at 62%, its highest point since ever. Similarly, Kalshi and PredictIt give him higher chances of winning against Kamala Harris.

Donald Trump would have a big impact on the soybean market because of his pledge to levy substantial tariffs on Chinese imports. He has floated a universal tariff of 20% on goods from all countries, with China suffering a 60% tariff hike.

Most economists believe that substantially high tariffs will lead to more inflation because these costs will be passed to consumers. That’s mostly because the US depends on China for most items. 

Also, the rising wages in the US mean that it is not likely for manufacturers to shift their operations in the United States.

Therefore, China will likely respond to these tariff threats by targeting the American agricultural sector, which is a crucial constituent of Donald Trump. 

The country has also been boosting its local soybean production. Data shows that China produced 20.8 million metric tons in 2023 and it hopes to get to 32 million tons by 2032. This is part of an elaborate strategy to reduce demand for its American soybeans. 

Technically, there are signs that the soybeans price has formed a small double-bottom at $9.78. In most periods, this is one of the most bullish patterns in the market, meaning that it may bounce back towards the election. 

A drop below this support at $9.78 will point to more weakness in the near term. Besides, as shown below, soybeans has formed a death cross on the weekly chart as the 200-week and 50-week moving averages crossed each other.

Soybeans chart by TradingView

Read more: US traders scramble to export soybeans ahead of potential China tariffs

Orange juice price analysis

Orange juice price has been in a strong uptrend in the past few years. Data shows that the price of the frozen concentrate rose to a record high of $509 earlier this week. It has soared by over 413% from its lowest point in 2020.

Florida is the main reason for the ongoing surge in orange juice prices. The state, which is the biggest producer in the US, has gone through several severe hurricanes that have destroyed thousands of trees. 

The most recent one was Hurricane Milton, which caused substantial damage to the state’s citrus. Therefore, there are rising odds that the state will not hit its production target for the year. 

Florida was expected to produce 20.5 million boxes of oranges this year, a 30% increase from last year. 

The rising waves of hurricanes mean that many citrus farmers will likely shift to other plants, which will lead to higher orange juice prices. 

Wheat price analysis

Wheat prices have held steady in the past few weeks, rising from a low of $4.96 to $5.58. This jump was mostly because of the ongoing weather-related issues in Russia, a leading producer. 

Data released this year showed that Russia’s wheat production will drop for the third consecutive year because of the hotter weather than expected. Its wheat production is expected to be about 80.1 million tons, the smallest production since the 2021 and 2022 seasons. 

Other countries like the United States and those in Europe have also reported weaker production in the past few years. However, the most recent data by the USDA shows that the US production will jump by 9% this year to 1.9 billion bushels. This increase is because of the increased planted area and higher yields. 

Therefore, there is a likelihood that wheat prices will remain on edge in the coming days as traders watch for more data.

Cocoa price finds support

Cocoa chart by TradingView

Meanwhile, cocoa is no longer the red-hot commodity it was a few months ago when its price surged to a record high. It has dropped by over 36% from its highest point this year, meaning that it is in a deep bear market.

Most recently, cocoa has found strong support at $7,566, where it failed to drop below since July this year. It has also dropped below the 50-week moving average. Most notably, it has found substantial support at the 200-day moving average.

Therefore, a break below the current level will point to more selloffs, with the next point to watch being at $7,000.