Jessica Amir
Market Strategist
Summary: WATCH our three-minute video. Wheat prices are rising in anticipation of some traders and investors expecting higher food prices, with Russia exiting the Ukraine gain deal and threatening to cut off Ukraine’s wheat supply from the world. We explore the three elements to watch, from commodities, stocks to ETFs. Including the US' biggest wheat producer, General Mills, Australia's biggest grain seller, GrainCorp, as well as why fertilizer stocks and poultry companies including Tyson Foods perhaps could be of interest.
Wheat prices (ZWZ2) rose 5.7% in anticipation of traders expecting food prices to pick up, after Russia exited the Ukraine gain deal and threatened to cut off Ukraine’s wheat supply from the world.
What do you need to know? Typically, the globe relies on the Black Sea region for a quarter of annual wheat and barley exports, a fifth of global corn and the bulk of its sunflower oil. So, Russia’s termination of the Black Sea deal means farmers could face a possible lack of storage space with wheat and corn nowhere to go, plus fertilizers, which farmers rely on to grow crops could be cut off, meaning the fertilizer market will also likely once again focus on supply concerns. Here are the three agricultural elements to perhaps watching;
Firstly - We will be watching Wheat and corn prices, as well as watching agricultural companies including General Mill (GIS), GrainCorp (GNC), Elders (ELD), as well as Fertilizers companies including CF industries (CF), Archer Daniels (AMD), who on sell such commodities and may be expected to sell goods at premium given supply could perhaps be cut short.
Secondly - We will also be watching ETFs like – Invesco DB Agricultural Fund (DBA), iShares MSCI Global Producers ETF (VEGI) and Betashares Global Agricultural Companies ETF (FOOD).
Thirdly - we will also be watching the flow on effects of the rising cost of wheat. It not only makes bread more expensive, but also the cost of chicken will likely rise, given Wheat is the biggest cost growing a chicken (75% of its costs). So if wheat prices continue to rise, farmers and sellers will likely be forced to hike their prices. So, it could be worth watching companies like Tyson Foods (TSN) who is one of the largest processors and sellers of chicken, mutton and beef in the US. In Australia there is Inghams (ING), who focused on producing and selling of poultry. Both Tyson Foods and Inghams shares are 8% up off their October low
Note, this is a developing story. We will cover the latest developments here. Or please follow our head of commodity strategy, Ole Hansen.
For a global look at markets – tune into our Podcast.
A new fragmented world order can render some of today's infrastructure obselete, but it also calls for massive new investments across the globe, which requires a new set of strategic and tactical investment strategies.
Steen Jakobsen,
Chief Investment Officer
As globalisation turns to fragmentation, China seems set on playing a role in the global economy, while simultaneously working towards proofing its own economic situation from external shocks and crises.
Redmond Wong,
Market Strategist
The recent bank runs and ensuing challenges are reminicent of something we've seen before. Will it end like the S&L crises of 1986 and 1995?
Chris Dembik,
Head of Macroeconomic Research
Equity markets need to recalibrate to another - fragmented - global world. What's your view on equities in this market - are they going up or down?
Peter Garnry,
Head of Equity Strategy
With every development comes new opportunites, some of which could be in India. Have you considered the country as a part of your diversification strategy?
Charu Chanana,
Market Strategist
A collar is an option strategy that allows some protection while maintaining some upside potential. What investment would you like to use a collar strategy for?
Hans Oudshoorn,
Trainer Academy
There are arguments to be made for many commodities to have upside. Which are you paying the most attention to this quarter?
Ole S. Hansen,
Head of Commodity Strategy
In a very challenging macro environment, which currencies do you think will come out on top?
John J. Hardy,
Head of FX Strategy
Disclaimer
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 (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/en-gb/legal/disclaimer/saxo-disclaimer)