• Fxwirepro commodities watch (grains and oilseeds)

    Source: FxWire Pro - Commentary / 15 Aug 2018 04:08:26   America/New_York


    Understanding commodities are vital to gauge the performance of other asset classes such as bonds, equities, and even currencies. Since, 2014, any regular follower of financial markets would be able to recall that how devastating the drop in oil prices has been for many countries like Russia, Brazil, Mexico, and Malaysia whereas net importers of oil like India have largely benefitted from it. Hence, it is of utmost importance to investors to keep a tab on the trends in the commodities market.

    Historically speaking, a rise in commodity prices has triggered a vicious chain reaction. First, the prices of commodities go up, which in turn triggers a rise in inflation, which again has historically triggered selloffs in bonds, which has not been good for equities in some cases.

    In this Commodities Watch we present to our readers, the performance of commodities, which in turn decide the wellbeing of many commodity producing and consuming nations. For example, the price of Cocoa is extremely important for the Ivory Coast, which is the biggest supplier of the commodity.

    For another Example, India is set to import record wheat this year; hence, the wheat price is of utmost importance for inflation in India.

    Biggest producers:

    • Rough Rice – India, China, Indonesia, Bangladesh, and Thailand
    • Soybean – United States, Brazil, Argentina, China, and India
    • Canola oil – Indonesia, Malaysia, China, European Union, and the United States
    • Corn – United States, China, Brazil, India, and Argentina
    • Wheat – China, India, United States, France, and Russia
    • Oats – Russia, Canada, Poland, Australia, and Finland

    Biggest Consumers:

    • Rough Rice – China, India, Indonesia, Bangladesh, and Vietnam
    • Soybean – China, United States, Brazil, Argentina, and the European Union
    • Canola oil – China, European Union, India, United States, and Indonesia
    • Corn – United States, China, European Union, Brazil, and Mexico
    • Wheat – European Union, China, India, Russia, and the United States
    • Oats – European Union, Russia, United States, Canada, and Australia

    2017 performance:

    In this article, we evaluate the performance of the grains and oilseeds, which are consumed by the almost entire world.

    • The best performer of this pack was Rough Rice (21.3 percent); it didn’t perform too well last year. In 2016, it was down more than 21 percent.
    • After being the best performer in 2016 (14 percent), Soybean was down by 3.4 percent in 2017. The market is suffering a supply glut in Soybeans along with lower demands from China.
    • After rising around 4 percent last year, canola oil was down 2.4 percent in 2017.
    • The price of corn is down 2 percent in 2017, after rising just 0.28 percent in 2016.
    • The price of wheat was down more than 12 percent in 2016, and in 2017, it was up 1.1 percent so far.
    • After rising 8 percent in 2016, Oats was up 5.6 percent in 2017.

    In 2016, this pack was down 1.6 percent on an average, but in 2017, it was up 3.3 percent.

    2018 performance:

    So far in 2018, Wheat has been the best performer with 23 percent gain, followed by Canola oil (+5.2 percent), Oats (+9.5 percent), and Corn (+2.9 percent).

    The worst performer has been Rough Rice (-13.8 percent), followed by Soybeans, which is down 10.7 percent YTD.

    So far, this pack has registered 2.7 percent gain YTD. The pack is up 1.6 percent since our last review a month ago.


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