Details Cookies
Important margin product information

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 75% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX or any of our other products work and whether you can afford to take the high risk of losing your money.

Cookie policy

This website uses cookies to offer you a better browsing experience by enabling, optimising and analysing site operations, as well as to provide personalised ad content and allow you to connect to social media. By choosing “Accept all” you consent to the use of cookies and the related processing of personal data. Select “Manage consent” to manage your consent preferences. You can change your preferences or retract your consent at any time via the cookie policy page. Please view our cookie policy here and our privacy policy here

180319 grain M-compressed 180319 grain M-compressed 180319 grain M-compressed

Agriculture commodities rejoin the Everything Up rally

Commodities 5 minutes to read
Ole Hansen

Head of Commodity Strategy

Summary:  Following a period of relative calm, the agriculture sector has embarked on another upside extension with the Bloomberg Agriculture index rising to a fresh 3-1/2-year high. Weather worries in South America supporting soybeans and sugar while emerging tightness in key crops are driving increased speculative interest. Adding to this the prospect for increased mobility lifting the outlook for softs like cocoa, coffee and cotton.

Following a period of relative calm, the agriculture sector has embarked on another upside extension. During the past week the Bloomberg Agriculture Index has gained 3.7% to reach a fresh 3-1/2-year high. As per the table below we are now seeing strength from both cocoa and coffee, a corner of the market that has suffered during the pandemic with consumers being stuck in their homes instead of visiting bars, restaurants and travelling through airports.

Cotton, another soft commodity has raced higher as demand for fibers look set to rise as consumers return to the shopping malls. At 95 cents/lb it is near the double top from 2014 and 2018 around 97 cents, just ahead of the 100 cents/lb mark not touched since 2011.

Other developments that have caught the markets attention are ongoing weather problems in South America. Poor weather in Brazil is currently supporting the prices of soybeans, sugar and coffee. Heavy rains during the past week have delayed the harvest of soybeans while exacerbating shipping logjams which are also impacting the export flows of sugar.

Increased edible oil demand is currently very strong with the May soyoil contract in Chicago soaring to 50.8 cents/lb, the highest level in eight years. Dryness in Argentina, a top exporter of processed bean products, has been one of the recent catalysts at a time of increased demand for edible oils together with a recovery in demand for biodiesel.


Arabica coffee, mostly produced in Brazil, has risen to a 14-month high with adverse weather - drought during flowering followed by too much rain – driving the price higher at a time where the market is beginning to look for a post-pandemic pickup in demand. Rabobank’s respected softs analyst has raised his global coffee-deficit forecast for 2021-22 to 2.6 million bags, compared with a surplus of than 10 million bags the previous year.

Adding to the list of supporting factors we have the recent cold spell, both in Russia, Europe and most noticeable in the U.S. which has raised concerns about a reduced winter wheat crop due to winterkill phenomenon. Staying with the grains sector, last week the chief economist at the US Department of Agriculture told the annual Outlook Forum that grains and oilseed prices, despite record planting, will remain tight during the 2021-22 season. The tightest beginning stocks for corn, soybeans, and wheat in several years, and expectations of continued strong import demand from China will continue to underpin prices. Unless production surprises to the upside and China slows its rapid purchase programs.

The emerging tightness across key agriculture commodities has resulted in the average roll yield of holding a portfolio of 11 ag futures for one year, has risen to the highest level in at least a decade. Since 2014 and up until last year, the constant state of oversupply, helped create a market where spot prices were the cheapest on the curve. With spot prices now being bid up we have seen a return to backwardation. This development where the front month contracts trade higher than the next helps create a positive carry when rolling the expiring contract into a later dated contract at a lower price.



By now the self-feeding loop is on full display: Strong fundamentals raising the roll yield while boosting the price thereby creating strong upside momentum which attracts even more buying, not only across agriculture commodities, but also other sectors such as energy and industrial metals.

In the week to February 16 hedge funds and other large speculators lifted bullish bets on 13 U.S. traded agriculture futures to a record 1.25 million lots, representing a nominal value of 45 billion dollars. The biggest exposure being held in CBOT corn (28%) followed by 26% in the three soy complex contracts of beans, meal and oil. In third place at 15% we have sugar while the smallest exposure is currently found in cocoa and feeder cattle.

The latest increase represents the culmination of a buying spree which started last June, as inflation worries due to massive amount of stimulus helped boost interest in commodities, with agriculture gaining extra interest due to production setbacks and rising demand for corn and soybeans from China.


Examples of Exchange Traded Funds/Commodities which tracks the agriculture sector.



The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website. This content is not intended to and does not change or expand on the execution-only service. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
Notification on Non-Independent Investment Research (
Full disclaimer (
Full disclaimer (

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15

Contact Saxo

Select region


Trade responsibly
All trading carries risk. Read more. To help you understand the risks involved we have put together a series of Key Information Documents (KIDs) highlighting the risks and rewards related to each product. Read more

This website can be accessed worldwide however the information on the website is related to Saxo Bank A/S and is not specific to any entity of Saxo Bank Group. All clients will directly engage with Saxo Bank A/S and all client agreements will be entered into with Saxo Bank A/S and thus governed by Danish Law.

Apple and the Apple logo are trademarks of Apple Inc, registered in the US and other countries and regions. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.