Piraeus Bank: Prices for agricultural products were further strengthened

Uncertainty fueled by the war in Ukraine, supply chains, growing import demands, and higher costs for inputs and raw materials have been factors in further boosting prices for agricultural products, along with climate change and weather, he points out. Piraeus Bank. in the 5th Agricultural Product Price Bulletin for 2022.

As he notes, the possible expectation of a normalization of the issue of export restrictions from India, in wheat, likely to limit its positive returns. For the sugar, crop uncertainty in Brazil and higher energy costs signal a possible rise in its price. Its relatively high price orange juice likely to favor its substitution, limiting demand. Slowing down the economic recovery may limit the demand for cotton, having a negative impact on its price. For the soythe expected increase in production may adversely affect its price, while for rice Restrictions on exported cereals and their high prices are likely to boost demand in the context of their substitution. THE market in cattle is expected to remain tight this year as well.

Although the commodity index strengthened (+ 1.50%) on a monthly basis, the agricultural products index had a larger increase (+ 5.35%). A possible cause may be the increased demand in relation to supply.

In China, macroeconomic data show a significant blow to economic activity (retail sales -11.1%, industrial production -2.9%, exports 3.9%,) from the strict restrictive measures, in the context of the zero tolerance policy for the coronavirus.

Given the above, as well as the expected rate of slowdown in the economic recovery, but also the maintenance of the aggressive monetary policy by the Fed, with the strengthening of the dollar, the prices of agricultural products are likely to test in the medium term, although in the short term their prices will continue. be favored by the changing international environment.

Significant market pressures

The international stock markets came under significant pressure on a monthly basis (S & P500 –8.76% and MSCI EM –9.47%), amid concerns about global growth and the ability of Central Banks to curb inflation, while Supply chain disruptions continue to pose a significant threat due to the war in Ukraine and the ongoing restrictive measures in China against coronavirus.

The Fed raised the key interest rate by 50 basis points, leaving open the possibility of an increase above the “neutral rate”, while the ECB is raising the voices of officials for a possible increase from July.

The investment interest turned to the deteriorating macroeconomic data and the corporate results that exceeded the estimates. The yield on the US 10-year bond stood at 2.88% and that of the 2-year bond at 2.58%. The dollar continued to maintain its positive momentum as a safe heaven, both against the euro and a basket of currencies, slightly reducing the positive returns of commodities compared to the previous month.

See the Bulletin in the right column Related Files