2024 Supply Shocks, Food Inflation Could Elevate Ag Commodities

2023 applied a lot of downward pressure on agricultural commodities as factors crimping supply were eased throughout the year. However, prices could get bullish again if 2024 brings supply shocks and more food inflation.

The latter was certainly felt by consumers at grocery stores worldwide. But with inflation starting to show signs of deceleration, those price pressures could subside. Geopolitical factors in tandem with harsh weather have continued to push agricultural commodities lower in 2023.

“Global wheat, corn and soybean prices – after several years of strong gains – are headed for losses in 2023 on easing Black Sea bottlenecks and fears of a global recession, although prices remain vulnerable to supply shocks and food inflation in the New Year,” according to analysts and traders per a Reuters report.

As mentioned, supply chains are improving. That, however, is not helping bullish ag commodities investors, at least in the interim. But if the same factors that helped to buoy prices in 2023 return in 2024, that could appease bulls.

“The supply picture for grains certainly improved in 2023 with bigger crops in some of the key places which matter. But we are not really out of the woods yet,” said Ole Houe, director of advisory services at agriculture brokerage IKON Commodities in Sydney, per the Reuters report.

“We have El Nino weather forecast until at least April-May, Brazil is almost certainly going to produce less corn, and China is surprising the market by buying larger volumes of wheat and corn form the international market,” added Houe.

An All-Inclusive Approach to Ag Commodities

Agricultural commodities exposure can provide a portfolio with the diversification it needs to help the navigate market uncertainty in 2024. An easy way is via a fund that provides an all-inclusive approach like the Teucrium Agricultural Fund (TAGS). It is essentially a fund of funds that features a low 0.13% expense ratio, which is beneficial in a time like now, when investors are more cost-conscious.

TAGS offers a perfect complement to a traditional 60/40 stock/bond portfolio with uncorrelated assets exposure, all in the convenience of one dynamic ETF.

“Agricultural commodities have a historically low correlation with U.S. equities making TAGS a potentially attractive option for portfolio diversification,” noted Teucrim on the TAGS product website.

TAGS combines exposure to Teucrium exchange traded funds focused on corn, wheat, soybeans, and sugar. Traders or long-term investors can focus on the fund for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.

The funds featured in TAGS:

For more news, information, and analysis, visit the Commodities Channel.