8 Commodity Predictions For The Rest Of 2014

May 15, 2014

Coffee hasn't been the only ag commodity to spike this year. The grains—corn, soybeans and wheat—have also done extremely well. This year's pop has been aided in large part due to the tensions between Ukraine and Russia. Ukraine, in particular, is a top-five exporter of corn and wheat, and the United Nations' Food and Agriculture Organization expects that its production of grains will fall as a result of its conflict with Russia.

The risk of reduced supplies in Ukraine has offset a rather abundant supply picture in the U.S. Just last Friday, the USDA projected that this year's corn crop will hit a new high of 13.9 billion bushels, edging up from last year's record. U.S. soybeans production is also expected to be at record levels.

That said, there is always the risk that U.S. supplies could be crimped by a drier or hotter-than-expected summer, as has happened on a few occasions in recent years.

Bull Case: The Russia-Ukraine conflict has already taken a bite out of Eastern European corn and wheat supplies, but exports could drop much more dramatically in the event of a significant escalation of tensions. Meanwhile, if this year's U.S. harvest is less robust than expected, grain prices could continue higher from here.

Bear Case: If the Ukraine crisis resolves itself and the U.S. sees record production, prices will likely head back to lower levels.

Prediction: Upside and downside risks for the grain complex are balanced, with equal likelihood of gains or losses from here. Teucrium's Wheat (WEAT), Corn (CORN) and Soybeans (SOYB) give investors access to each of those respective commodities. For broader access to all of the main ag commodities, including coffee, cotton and sugar, take a look at the iPath Dow Jones UBS Agriculture Total Return ETN (JJA | B-58).

Wheat (YTD)

wheat

 

Find your next ETF

Reset All