Agri Commodity Markets Research August 2022: Taming of the Bull

Fund liquidation and recession fears broke the BCOM Agri Index’s two-year bull run in May (+132% over that two-year period), but the index has recovered about half of its losses (+12% MOM) since it became clear that scorching northern hemisphere weather would leave exporter reserves at historically low levels through 2023. We’re in the midst of or approaching northern hemisphere harvests that typically mark seasonal lows (goods are at their most plentiful), yet grain & oilseed prices are holding strong. Wheat is a notable and ironic exception, as Russia is having a bumper crop that offsets Ukraine’s shortfall. On the softs side, ICE #11 Sugar has traded in a range so far in August, as the market awaits India’s 2022/23 export quota announcement. Meanwhile, ICE Arabica futures (+11.6% MOM) are being supported by a strong BRL (BRL/USD cross +5% MOM). For importers (who buy most of these goods in dollars), the real concern is an appreciating USD (DXY is close to 20-year highs), which is offsetting much of the recent discount. Ultimately, we expect consumer behavior to tame the bull through inflation-led shifts that lower overall consumption.

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  • Carlos Mera

    Head of Agri Commodities Markets
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  • Michael Magdovitz

    Senior Commodity Analyst
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  • Paul Joules

    Junior Commodities Analyst
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