Agri Commodity Markets Monthly August 2020: Funds Are Back
The S&P GSCI Agricultural Index jumped 4% in August – in part because US corn and soybean yields failed to stay at the high levels expected at the start of the month. US Dollar Indices continued to remain at relatively low levels, and demand has been better than expected; however, the main bullish influence was probably funds. Commodity index funds have been buying across ags for the last eight consecutive weeks, as investors look to hedge inflation and even equities (gold is already very expensive and real estate illiquid). We expect commodity index funds to continue buying, as concerns about the size and length of the monetary and fiscal stimulus will continue. Non-Commercials were also net buyers in seven out of the last eight weeks, as more of those concerns do not only materialize via index funds, but also through all sorts of investment vehicles, including ETFs. However, fundamentals will limit upside.