Quarterly Commodity Market Update: January 20, 2010

Apricots: The apricot crop harvested in August was smaller than last year, and pricing is expected to increase due to lower supplies.

Almonds: Demand for almonds remains strong, and there were less of the smaller variety of almonds harvested. Pricing remains firm and will continue to increase if almonds make record shipments for future months as they have over the past few months.

Cocoa: The cocoa market remains at extreme high levels. The market pricing is at historic highs with no end in sight. Powder is extremely expensive because there is an over abundance of cocoa butter, and no one wants to press for more butter to get more cocoa powder. (To obtain powder you must press the liquor for butter. Cocoa powder is the “by product” when pressing for butter. Therefore you need to make more butter to get powder, and there is already too much butter. Manufacturers want the butter inventories to lower before pressing for more butter, which in turn will create more powder.) Inventories of beans are dangerously low as well, and investors are also getting in on the action. This all adds up to the potential of the highest chocolate prices ever. If the market does not improve by the end of Easter, there will be significant price increases.

Coconut: Coconut has become stable and pricing should remain at or near current levels. The oil market has softened and the majority of Coconut trees have been spared by the recent typhoons in the Philippines.

Cashews: Cashews have changed course again and are going higher. There have been heavy rains in Viet Nam lowering output and Brazil’s crop is late. Add to this the fact that worldwide demand has increased with supplies already low.

Oats: Following corn, the oats have lowered in price. If fuel oil remains relatively low, the corn should stay down along with other grains that compete with corn.

Peanuts: The peanut crop is short and the weather has not been favorable (too wet) in the south. Add to this a weak dollar which encourages export sales. Peanuts and peanut products have increased in price.

Pecans: This is the “on” year for pecans which usually means there is better pricing. Unfortunately, that couldn’t be further from the truth. The pecan harvest was good, but the Chinese hit the market with substantial purchases of in-shell product during the end of 2009. This has created a shortage of available product resulting in very strong pricing.

Pineapple/Papaya/Mango: Tropical fruit pricing remains firm due to poor crops, high demand, and a weaker US dollar.

Pistachios: California pistachios have become extremely expensive because the Iranian crop is very small due to a severe frost. There does not look like much relief in sight for 2010.

Raisins: At this time the raisin market has remained stable and pricing is comparable to last year. Currants are much higher, though, due to a severe shortage of product harvested.

Sugar: The sugar market is still extremely volatile. Pricing is at historic highs due to shortages around the world. The US crop, especially the beets, has been exceptional. However, with world markets short there is extreme pressure on the US sugar.

Walnuts: Since the last Commodity Market Update walnuts have increased in price substantially. There is a shortage of light product due to some heavy rains during harvest. Also, the Chinese have wreaked havoc with the walnuts; importing far more than expected. Walnuts are much higher than just eight weeks ago. There is no sign of them coming down anytime soon.

Wheat: Wheat pricing is actually coming down as some investors do not view wheat in a very positive way as of late. However, overseas markets can quickly affect the pricing of wheat. Wheat remains one of the most volatile commodity markets.