Record Agricultural Output, Yet Capital Flees in Droves
As agricultural output hits record levels and the outlook for meat supply improves, US agricultural futures prices have plummeted, and the tide of capital flooding into US agricultural futures has come to an abrupt halt. Data shows that in the first 5 months of this year, capital flowing into the agricultural market far exceeded
As agricultural output hits record levels and the outlook for meat supply improves, US agricultural futures prices have plummeted, and the tide of capital flooding into US agricultural futures has come to an abrupt halt.
Data shows that in the first 5 months of this year, capital flowing into the agricultural market far exceeded that of the precious metals and crude oil markets. Then the situation took a sharp turn for the worse. As of the end of August, the agricultural exchange-traded products (ETP) market saw a net outflow of 57.7 million USD, a decline of 2.9%. During the same period, energy, precious metals, industrial metals and other categories saw net capital inflows, bringing the total investment capital scale of the entire raw materials market up by 341 million USD, an increase of 0.5%.
From the perspective of the international futures market, since the beginning of this year, coffee, live cattle and pork futures have become the stars of the commodity futures market, while cotton, soybeans, corn and wheat have recently fallen continuously, sinking into a bear market. Since April of this year, bullish speculative positions in agricultural products have plummeted by 78%, due to the fact that US agricultural products will enjoy a bumper harvest this year, with output set to hit a historic record. Data shows that global food costs have fallen for 4 consecutive months.
Agricultural analysts said that this year will be a year of a big bumper harvest for US agricultural products, and more and more evidence confirms this, so there should not be any surprises.
The most recent rally in the agricultural market was at the end of April, when rainfall delayed crop planting, which temporarily stimulated agricultural product price increases, and US agricultural exchange-traded products saw a net capital inflow of 45.8 million USD. Meanwhile, precious metals exchange-traded funds (ETFs) saw a net outflow of 380 million USD, the energy market saw an outflow of 12.7 million USD, and the industrial goods market saw an inflow of 48.6 million USD.
According to a report by the US Department of Agriculture, favorable weather after April will bring this year's US corn harvest to a record 14.032 billion bushels, and soybean output is expected to reach 3.816 billion bushels. The US Department of Agriculture said last week that this year's US crop growing conditions are the best in at least 20 years. Chicago Board of Trade (CBOT) corn and soybean futures recently hit 4-year lows, falling more than 30% from this year's highs.
Expectations of lower feed prices have also limited the gains in live cattle and pork futures prices. Although livestock prices are rising, the ETP products linked to them have seen net capital outflows. According to statistics, as of the end of August, the net outflow reached 10.2 million USD, while at the end of May, this category saw a net inflow of 3.2 million USD.
According to data from the US Commodity Futures Trading Commission, in early August, money managers' net long positions in 11 agricultural futures and options contracts soared to 1.1 million lots, the highest since 2010. As of August 26, most of their long positions had been cut, leaving only 248,300 lots. Speculators are also bearish on the outlook for soybeans, cotton and white sugar markets.
Since early May of this year, the international agricultural product index has fallen by 21%. During the same period, the commodity index including 22 raw materials fell by 9.1%, while the Morgan Stanley World Index rose by 4.1%, and the Bloomberg Treasury Index rose by 2.1%.
While most agricultural futures prices fell, some metal prices rose. As inventories fell to lows since 2008, copper futures rose for 4 consecutive months, and aluminum prices rose by 17%. Geopolitical tensions also pushed gold futures up by 5.2% to around 1,265 USD. Since May, precious metals ETF holdings have rebounded, with a net inflow of 123 million USD as of August 29. Industrial metals ETFs saw a net inflow of 105 million USD, and energy funds saw a net inflow of 25.3 million USD.
Data shows that in the first 5 months of this year, capital flowing into the agricultural market far exceeded that of the precious metals and crude oil markets. Then the situation took a sharp turn for the worse. As of the end of August, the agricultural exchange-traded products (ETP) market saw a net outflow of 57.7 million USD, a decline of 2.9%. During the same period, energy, precious metals, industrial metals and other categories saw net capital inflows, bringing the total investment capital scale of the entire raw materials market up by 341 million USD, an increase of 0.5%.
From the perspective of the international futures market, since the beginning of this year, coffee, live cattle and pork futures have become the stars of the commodity futures market, while cotton, soybeans, corn and wheat have recently fallen continuously, sinking into a bear market. Since April of this year, bullish speculative positions in agricultural products have plummeted by 78%, due to the fact that US agricultural products will enjoy a bumper harvest this year, with output set to hit a historic record. Data shows that global food costs have fallen for 4 consecutive months.
Agricultural analysts said that this year will be a year of a big bumper harvest for US agricultural products, and more and more evidence confirms this, so there should not be any surprises.
The most recent rally in the agricultural market was at the end of April, when rainfall delayed crop planting, which temporarily stimulated agricultural product price increases, and US agricultural exchange-traded products saw a net capital inflow of 45.8 million USD. Meanwhile, precious metals exchange-traded funds (ETFs) saw a net outflow of 380 million USD, the energy market saw an outflow of 12.7 million USD, and the industrial goods market saw an inflow of 48.6 million USD.
According to a report by the US Department of Agriculture, favorable weather after April will bring this year's US corn harvest to a record 14.032 billion bushels, and soybean output is expected to reach 3.816 billion bushels. The US Department of Agriculture said last week that this year's US crop growing conditions are the best in at least 20 years. Chicago Board of Trade (CBOT) corn and soybean futures recently hit 4-year lows, falling more than 30% from this year's highs.
Expectations of lower feed prices have also limited the gains in live cattle and pork futures prices. Although livestock prices are rising, the ETP products linked to them have seen net capital outflows. According to statistics, as of the end of August, the net outflow reached 10.2 million USD, while at the end of May, this category saw a net inflow of 3.2 million USD.
According to data from the US Commodity Futures Trading Commission, in early August, money managers' net long positions in 11 agricultural futures and options contracts soared to 1.1 million lots, the highest since 2010. As of August 26, most of their long positions had been cut, leaving only 248,300 lots. Speculators are also bearish on the outlook for soybeans, cotton and white sugar markets.
Since early May of this year, the international agricultural product index has fallen by 21%. During the same period, the commodity index including 22 raw materials fell by 9.1%, while the Morgan Stanley World Index rose by 4.1%, and the Bloomberg Treasury Index rose by 2.1%.
While most agricultural futures prices fell, some metal prices rose. As inventories fell to lows since 2008, copper futures rose for 4 consecutive months, and aluminum prices rose by 17%. Geopolitical tensions also pushed gold futures up by 5.2% to around 1,265 USD. Since May, precious metals ETF holdings have rebounded, with a net inflow of 123 million USD as of August 29. Industrial metals ETFs saw a net inflow of 105 million USD, and energy funds saw a net inflow of 25.3 million USD.