Quarterly Commodity Market Update: June 30, 2010

Apricots: The apricot crop harvested in August was smaller than the previous crop, and pricing is expected to increase due to lower supplies. Added to this the crop harvested was very wet, and there is some problems with mold making quality product difficult to obtain and higher in price.

Almonds: Almond shipments have dropped over the last few months, and the current crop looks healthy so far. The market has moved downward, and should remain so until the new crop which would most likely be the only factor to make the market return higher.

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 pricing has become more uncertain in the last few months due to severe drought conditions in parts of the Philippines, and continually higher costs for shipping this product halfway around the world. Expect pricing to increase throughout the rest of the year.

Cashews: Cashews continue to move higher. Vietnam’s first crop is in and appears good, but there has been excessive heat that could have a negative effect on their second crop. The Indian crop has been good, but worldwide demand has increased while supplies remain low.

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

Peanuts: The peanut crop has stabilized for the time being, but there could be supply issues going into new crop and next year.

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 was very small due to a severe frost. There does not look like any 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. Also, most varieties of imported raisins are in short supply, due to poor crops and demand for table grapes. Imported raisins are now more expensive than CA raisins.

Sugar: The sugar market is still extremely volatile even though pricing has eased from the historic highs seen earlier in the year. The US crop, especially the beets, has been exceptional. However, with world markets short there is extreme pressure on the US sugar.

Walnuts: There continues to be a shortage of light product due to some heavy rains during harvest, and there is a fear of walnut shortages over the entire spectrum of walnuts. World demand is very strong, and there is no sign of pricing coming down anytime soon.

Wheat: Wheat pricing is relatively stable. However, overseas markets can quickly affect the pricing of wheat, and wheat is still one of the most volatile commodity markets.