{"id":41658,"date":"2023-07-28T12:33:14","date_gmt":"2023-07-28T16:33:14","guid":{"rendered":"https:\/\/ifintechworld.com\/investing\/bearish-commodities-should-brace-for-an-epic-agriculture-rally\/"},"modified":"2023-07-28T12:33:16","modified_gmt":"2023-07-28T16:33:16","slug":"bearish-commodities-should-brace-for-an-epic-agriculture-rally","status":"publish","type":"post","link":"https:\/\/ifintechworld.com\/?p=41658","title":{"rendered":"Bearish Commodities Should Brace For An Epic Agriculture Rally"},"content":{"rendered":"
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Fund investors are bailing on commodities, and meanwhile the war in Ukraine suggests they should be doing the opposite.<\/p>\n

The combination of sustained commodities fund outflows along with a pending disruption to global grain supplies suggest a possible epic rally for the sector.<\/p>\n

Bearish Commodity Fund Outflows<\/h2>\n

New data from the Washington D.C.-based Investment Company Institute shows redemptions from mutual funds and exchange-traded funds specializing in commodities in each of the five weeks through July 19, which is the latest data available.<\/p>\n

The flows were relatively small compared to stocks or bonds, but the commodities markets tend to be much thinner and generally overlooked by many fund investors.<\/p>\n

However, the outflows were significant totaling $2.9 billion over the five week period. The weekly outflows ranged between $800 million and $256 million.<\/p>\n

While some major agricultural products has staged rallies over the last few weeks their prices are still down versus 10 months ago. For instance, wheat recently fetched $7.17 a bushel down from $9.38 in early October, according to data from Trading Economics. Corn is down also, recently trading at $5.36 a bushel versus nearly $7 last November, data show.<\/p>\n

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When you have consistent and meaningful outflows amid falling prices it\u2019s often a sign of pessimism for the sector. However, extreme pessimism is usually a sign that the market could move in upwards in short order.<\/p>\n

More War Problems for Food<\/h3>\n

Yet the actual fundamentals in the commodities have a solid outlook, experts say.<\/p>\n

The recent rallies in the agricultural come on the back of extreme weather in the U.S. and other parts of the, plus a resurgence of geopolitical tensions most notable those stemming from the Russia-Ukraine conflict.<\/p>\n

Shawn Hackett, who writes the The Hackett Agricultural Smart Money Insiders newsletter, explains in a recent report hat weather may now be taking a backseat to conflict, as follows.<\/p>\n