FxWirePro: Commodities Watch (Grains and Oilseeds)

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 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.

Since our last evaluation in February, the price of grains and oilseeds have softened, so have the inflation readings across the world.

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

• The best performer of this pack so far is Rough Rice (5.51 percent); it didn’t perform too well last year. In 2016, it was down more than 20 percent.
• After being the best performer last year (14 percent), Soybeans are down 4.29 percent YTD.
• After rising around 11 percent last year, canola oil is up just 0.39 percent so far.
• The price of corn is up 1.28 percent YTD, after rising just 0.28 percent last year.
• The price of wheat was down more than 12 percent last year, but this year it is up 2.89 percent so far.
• After rising 7.87 percent last year, Oats is the worst performer of the pack this year as it is down by 4.85 percent.

As a pack, it is up 0.15 percent so far this year.