Has the Brexit crisis done a favour for agricultural commodities?
A week on from the UK's vote to leave the European Union, markets' vital statistics do not look nearly so terrifying.
US shares, as measured by the Dow Jones industrial index closed last night just 0.4% below where they stood the week before the poll result, having slumped earlier in what might be called Brexit's ground zero week, as investors scrambled for assets deemed safe havens instead.
The Vix index, the so-called gauge of fear, stood up 1.8%, having at one stage over the week posted gains of more than 40%.
As for commodities, the CRB index stood just 0.5% below where it had a week before.
But if that conveys an image of harmonious performance – of an across-the-board withdrawal of risk premium earlier in the week, before reinjection as fears subsided – agricultural commodities were, at best, on the edge of the picture.
Asset performance, general markets, for the week after the Brexit vote
Brent crude: -2.4%
CRB commodities index: -0.5%
Dow Jones Industrial Average share index: -0.4%
Dollar: +2.9% (against a basket of currencies)
And along the way, many contracts bucked the trend of falling shares, and a rising dollar too.
On the first day of Brexit ground zero week, last Friday, best-traded September wheat futures traded down just 0.2% in Chicago, (where the spot July contract showed a small gain), even as the safe haven of the dollar was soaring by 2.5%.
The next day, soybeans posted a 1.6% gain, and sugar a 2.5% jump, even as investors were still scrambling for the exit on other risk assets.
It looks like agricultural commodities have bashed out another dent to their reputation as uncorrelated assets, which took a battering around the turn of the decade, when they proved no more resistant that the likes of shares to the world financial crisis.
Asset performance, selected ags, for the week after the Brexit vote
Raw sugar: +6.9% (New York)
Soybeans: +4.7%, (Chicago)
Wheat: -5.5%, (Chicago)
Corn: -6.7%, (Chicago)
Cocoa: -6.9% (New York)
"While the risk premium on commodity futures is essentially the same as equities, commodity futures returns are negatively correlated with equity returns and bond returns," a paper by Yale and Wharton academics said.
The trouble was that the extent of fund interest in commodities rendered them as vulnerable as equities to a crisis which prompted institutional selling en masse.
Still, ags had already this year highlighted their divorce from share markets in performance terms, with gains which far outperformed those stockmarket investors were enjoying.
It looks like the last week has only highlighted further their market independence.
This could attract a whole new wave of investment into ags by funds reminded that the aftershocks of the world economic crisis – to which many see roots of the UK's Brexit vote – still have the power to send markets into turmoil.
The trouble is that such a cash injection could, once again, hitch commodity and share markets together again.
It is no coincidence that the decorrelation of shares and commodities followed a mass withdrawal from raw materials markets of assets under management, whose value sank from a pre-crisis high of $150bn to $67bn by 2014.
The likes of Harvard University, which last year cut to zero its target commodities allocation in its $36bn portfolio, may have regretted their exit.
But allowing ag markets the freedom to move their own way isn't all bad.
By Mike Verdin