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Ags extend winning run to record, backed by Covid-revival theme


Hopes for a post-pandemic, or at least Covid-controlled, world shone through in ag markets in February, as some of the contracts worst hit by lockdowns led price recovery.


The Bcom ag subindex rose for a ninth successive month, for the first time on data going back to 1990, and continuing its bounce from its record low reached in June.


Commodities were popular anyway, helped by their perception as an asset class offering a hedge against the inflation expected to revive thanks to the knock-on effect of government economic recovery measures.


As ASB said, “markets are increasingly anticipating an upsurge in consumption and activity once Covid vaccine uptake is widespread, behavioural restrictions are lifted and pent-up demand gets going.


“Further fiscal stimulus out of the US,” and investment in technology to counter climate, could also “flow through to higher consumption, just as public investment in reconstruction helped trigger the post-second world war commodity boom”.


Energy boost

For lean hogs, US inflationary fears, in prompting retailer stockpiling, are seen as supporting prices of pork and thence pigs themselves, with strong US exports to the likes of China, Japan and Mexico helping too.


Meanwhile, recovering energy values fuelled gains in ags such as canola, which hit a record high last month, and soyoil used in making biofuel.


Post-Covid consumption revival ideas helped too the likes of cocoa, and of coffee which also received a boost from worries over the hit to Brazil’s 2021 (and even 2022) crop prospects from dryness.


Wheat struggles

Wheat, by contrast, as a food staple which enjoyed relatively strong demand even during the pandemic, failed to find such support, although remains higher for 2021.


As an extra pressure, spring is a seasonally weak period for prices, according to ADM Investor Services, although whether the spectre of recent northern hemisphere cold snaps will, if developing crops show winterkill damage, return to revive prices ahead…

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