The softs sector is so far showing a 32% year-to-date gain, while the grains sector has fallen by 14%. Despite weather scares early in the growing season and concerns about Ukraine, a bumper crop has emerged following a strong growing season across the northern hemisphere. Lower wheat, corn and soybean prices have done a great deal to reduce inflationary pressures around the world, but dark clouds may still emerge into the southern hemisphere production season with hot temperatures in Australia and too much rain in parts of South America highlighting the different impact of El Niño which may grow in strength in the coming months.
The softs sector has experienced a much more challenging year so far with many of the products being produced across regions from West Africa to India and Thailand which have been exposed to extreme temperatures and with that loss of water and production. Examples being cocoa which trades near a 44-year high with this season’s Ivory Coast port arrivals remaining well below last season’s pace while sugar has reached a 12-year high, driven by port congestions in Brazil at time where India’s crop has been hurt by dryness, leading to export restrictions from the world’s second largest shipper. Furthermore, lack of rain in October due to continued impacts of El Niño could signal the country’s production problems will extend for a second season, limiting supplies through 2025.