Piraeus Bank: Agricultural products index jumped 8.95% in November

Positive returns are recorded by all the individual agricultural products, but also by the index, with the demand exceeding the supply, as Piraeus Bank points out in its monthly bulletin for the prices of agricultural products.

In particular, the bank notes that the international stock markets strengthened on a monthly basis, with the S & P500 performing significantly (+ 4.51%) and the MSCI recording a marginal increase (+ 0.30%). The investment climate was supported by the most positive, as expected, corporate results, announced in the US, and the total infrastructure package of $ 1.2 trillion.

In the Eurozone, restrictive measures due to the pandemic are an obstacle to the prospect of economic activity, combined with very high prices for energy resources. The market is looking forward to the ECB ‘s report on its intentions for quantitative easing following the completion of the PEPP at its next meeting.

Prolonged concern about rising inflationary pressures has boosted volatility in the US government bond market, bringing yields to 1.59% (10 years) and 0.50% (2 years). Significant gains for gold, despite the strengthening of the dollar against the euro and a basket of coins. Significant decline in oil prices, based on the strengthening of US crude reserves and the possible release of strategic oil reserves of the US and China, in an effort to reduce international oil prices.

Positive returns are recorded by all the individual agricultural products, but also by the index, with the demand exceeding the supply. The most important yields were wheat, cotton, corn and orange juice.

Reduced wheat production, combined with low stocks may have a positive effect on its price. Sugar prices are likely to remain high as demand remains strong, despite forecasts for increased production. For cotton, strong demand and the need to use sustainable consumer products are likely to boost its price. Although China continues to buy soybeans, a possible shift in trade flows with the US due to Brazil could put downward pressure on its price. With rice stocks and production expected at relatively high levels, the price of rice may come under downward pressure.

Although the commodity index fell on a monthly basis (-2.74%), the agricultural products index strengthened significantly (+ 8.95%). The probable cause seems to be the enhanced expectations of demand in relation to supply, with the technical picture of the index appearing relatively positive in the short run. On the other hand, a further strengthening of the dollar as a result of the Fed tapering and a non-substantial progress in US-China trade relations are likely to have a negative effect on agricultural commodity prices. At the same time, the high level of their valuations may be another factor in the downward pressure of their prices in the medium term.

The Price List of Agricultural Products, which is implemented for the Agricultural Sector of Piraeus Bank by the Economic Analysis & Investment Strategy Unit, is addressed to an extremely wide audience, which is active in the agri-food sector.
Attached is the 11th Agricultural Product Price Sheet for 2021, of Piraeus Bank.