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April 13, 2017 Printable Version Printable Version

The Easter Bunny’s Hopping All The Way To The Bank
By Julianna Paterra, CAIA, Analyst

The Easter Bunny has a lot to celebrate this holiday as cocoa and sugar prices continue to slump.  Both commodities experienced a supply surplus in recent months, largely due to substantial rains during El Niño, which has substantially decreased prices.  The Ivory Coast experienced a hearty rainy season and dry winds from Northern Africa were below their historical averages; both trends increased the country’s cocoa yield and led to a 20% reduction in cocoa prices over the past 6 months.  Additionally, Brazil benefitted from a very healthy rain season which led to a record production of sugar crops and a global surplus of the commodity.  Sugar prices have fallen 18% in the past 6 months. 

Americans are anticipated to spend $2.6 billion on Easter candy this season and the Easter Bunny’s haul is a substantial portion of that total which should allow him to increase his margins.  Given the uncertainty across the globe, coupled with high equity valuations and the prospect of rising interest rates, we recommend he invest in a diversified portfolio and rebalance as appropriate.

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