Agri Commodity Markets Research June 2022: Summer of Discontent

Agri commodity prices have taken a tumble so far in June, with the S&P GSCI Agriculture Index losing 8.6%. The drop comes as other asset classes are falling (the Dow Jones Industrial Average was down 7.6% in the same period), triggered by interest rates hikes, inflation concerns, and hawkish central bank rhetoric. This was accompanied by significant fund selling across most agri commodities; softs in particular saw heavy selling during the week ending June 14, with non-commercials shedding 30,403 lots of ICE #11 Sugar and a further 16,661 lots of ICE NY Cocoa. Non-commercials also increased their short position in CBOT Wheat, selling 7,172 lots in June so far. However, weather risks are high, with a heat wave in the US and Europe and an active La Niña. Energy prices are still pushing costs of pretty much everything up, and container scarcity is far from over.

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