Severe climate conditions constraining supply of certain agricultural commodities weren’t enough to push food prices higher through the month of October. That’s according to data from the United Nations. Even sugar, which has risen exponentially this year, retreated along with other agricultural commodities.
“The United Nations food agency’s world price index fell in October to its lowest level in more than two years, driven by declines in sugar, cereals, vegetable oils and meat,” Reuters reported. It added that the Food and Agriculture Organization’s price index “averaged 120.6 points in October, down from 121.3 for the previous month.”
Wheat was a commodity that saw selling pressure, based on the FAO Cereal Price Index. That index was down 1.3 points versus September. The FAO also noted wheat production in 2023 is up 0.9% from last year. That’s despite harsher weather stemming from droughts.
“International wheat prices fell by 1.9% in October, reflecting generally higher-than-earlier-anticipated supplies in the United States of America and strong competition among exporters,” the FAO said.
Looking ahead to next year, wheat could be limited in certain areas like Ukraine. The country is still in the midst of conflict with Russia. Corn supply could also be limited, especially in top producers like Brazil. That country has experienced droughts that have been racking its supply due to lack of rainfall.
“Turning to 2024, winter wheat plantings are underway across the northern hemisphere and area growth is expected to be limited, reflecting softer crop prices this year,” added the FAO.
“In Brazil, early indications point to a pullback in maize plantings of around 5%, as cost-price ratios are favouring soybeans,” the report said.
If fewer plantings equate to rising prices, investors may want to get exposure now while it presents value.
Get Broad Ag Commodities Exposure
The drop in prices can present opportunities for investors wanting agricultural commodities exposure to diversify portfolios or to trade future upside when prices gain. Consider the Teucrium Agricultural Fund (TAGS). The fund is essentially a fund of funds featuring a low 0.13% expense ratio.
It combines exposure to Teucrium exchange traded funds focused on corn, wheat, soybeans, and sugar. Traders or long-term investors can focus on TAGS for broad-based exposure or the individual funds for a more focused, concentrated approach in specific commodities.
The funds featured in TAGS:
- Teucrium Corn Fund (CORN)
- Teucrium Wheat Fund (WEAT)
- Teucrium Soybean Fund (SOYB)
- Teucrium Sugar Fund (CANE)
For more news, information, and analysis, visit the Commodities Channel.