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CBOT Soybeans - SOYBEANSNOV20
CBOT Corn - CORNDEC20
CBOT Wheat - WHEATDEC20
AIGA:xlon - WisdomTree Agriculture ETC (UCITS eligible)
The grain sector finished September and the third quarter with a bang after all three major crops rallying strongly on Wednesday. This after U.S. Department of Agriculture stockpiles data showed corn, soy and wheat inventories all trailing the average estimates from analysts. As a result the Bloomberg Grains index finished the quarter up 12.3% to record its best quarter in more than five years.
Overall it was a strong quarter for agriculture commodities in general with the sector finishing up close to 12% with gains seen across all three sub sectors of grains, softs and livestock. With the strong finish for the grains sector there are now expectations that a lower U.S. production, due to adverse weather in August, and increased worries about a La Nina event will continue to support the sector over the coming months.
Thereby providing support to Central Banks desire for higher inflation, in this case unfortunately, the worst kind of inflation as it hurt consumers, especially in emerging market economies, that can least afford it.
A potential break on the current rally could either be another leg higher in the dollar which reduces overseas demand for U.S. farm products and/or the risk that China may pause its buying in response to the recent rally in both corn and soybeans.