Agri Commodity Markets Monthly February 2021: La Niña and the Ox
Our title is not a children’s fable but a reference to two major forces that have caused tightness in many agri commodities and pushed prices to multi-year highs. La Niña upended weather in key producers like Brazil and Argentina and threatens to continue to cause havoc in 2021, as recent cooling of the Pacific seems to indicate it could continue for longer than expected. Meanwhile, unprecedented and long-lasting import demand is being generated from China, which is celebrating the year of Ox. G&O exporters in particular will be stretched by Chinese and Covid-emergent global demand and farmers will maximize acreage in response. Strong harvests will not reflate G&O balance sheets but rather keep global demand from rationing... with low stocks volatility is likely.