Independent Strategy

Agro commodities – a hedge against tightening liquidity

In a world of rising interest rates and tightening liquidity that is hitting equity and bond markets, commodities remain a good hedge and alternative. Food security remains an increasing problem and, although consumer demand may suffer from falling average disposable incomes in the major economies, food demand remains relatively inelastic. The risk to prices is if supply blockages in grain (like that for Ukraine wheat, where the harvest begins next month) suddenly loosen. But grain storage and logistics remain pressured. And the increased restrictions on the export of agro commodities by many countries is strangling supply. So we are keeping our longs in grains and cotton.

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