Agri Commodity Markets Research July 2023: Scorched Earth

July has been a gripping month for agri commodities, with the S&P GSCI Agriculture Index rising over 8%. Geopolitics were front and center following the cancellation of the Black Sea Grain Initiative and subsequent Russian missile attacks on the port of Odessa and the Danube River (the only viable alternative waterway). Unsurprisingly, global wheat futures led the charge higher, with CBOT Wheat up 15.4% month-to-date. Meanwhile, scorching heat and dryness over the US earlier in the month (followed by late rains that are unlikely to improve middling soy and corn yields), alongside an ongoing extreme drought in parts of southern Europe raised concerns for G&O production. For softs, El Niño remains a key factor to watch, particularly for sugar production in Thailand, cocoa production in West Africa, and robusta production in Southeast Asia. Supply-side concerns are prominent throughout agri commodities, with many prices rising along the futures curve. Food inflation may persist.