Agri Commodity Markets Research September 2023: Falling in the Fall

September marked a bearish month for many agri commodity classes, with the S&P GSCI Agriculture Index declining 2.2% MOM. A strong US dollar (+2.8% MOM), alongside demand-side concerns, contributed to much of the weakness seen this month. Nevertheless, supply-side risks remain: El Niño continues to be a key factor to watch, particularly for wheat, cocoa, sugar, and robusta production. Meanwhile, the market is keeping a close eye on Russia’s wheat export policy, which remains unclear. Funds are very short across G&O markets, and this provides risk to the upside should any production issues emerge. For softs, the reverse is true: Funds are very long, and we are seeing a large risk premium priced in for potential weather issues, which are not yet a foregone conclusion.