Despite the recent correction, commodities are in their seventh year of gains, which has led exchange traded funds (ETFs) embarking on one of their largest growth spurts. Some now think the bottom is in sight, and it’s not because of rising demand, but rather supply cuts.
Corn and soybeans have rebounded as reduced crop yields have pushed U.S. stockpiles to five-year lows, reports Madeline Pearson on Bloomberg.
Supply constraints are becoming more pertinent, and this will separate the performance of each individual commodity. China and India are also driving demand, along with production disruptions, such as drought, flooding and power outages.
Many of the commodities that experienced a correction are showing signs of renewed vigor. Corn and soybeans were down as much as 37% off their highs, but have rebounded in the last two weeks. Delayed plantings threaten to lower U.S. yields, and there’s concern that export tax protests may disrupt supplies from Argentina, the third-largest producer of soybeans and second-largest of corn.