Ag Commodities Deliver Impressive 2020 Performances, Despite Challenges

Posted on Mon, 01/04/2021 - 05:36

Even as global economies gradually improve after the tumultuous virus-plagued 2020, several agricultural commodity markets outperformed stocks, gold and copper last year. A big second-half rally, bookended by adverse weather in the U.S. and then in South America, that also got a boost from strong Chinese demand and labor unrest in Argentina, helped soybeans and soymeal lead commodities higher.

Nearby soybean meal futures soared 48.3% in 2020, followed closely by a 39.5% gain in soybeans. Soybean oil rallied 25.6%. Corn firmed 24.8% for the year and HRW wheat rose more than 20% in 2020.

Those rallies topped a gain of 21% in gold futures and nearly 16% in the S&P 500 stock index. Copper started the second-half rally on signs of stronger growth in China and a U.S. housing boom.

After falling to a negative $40.32 on April 20 at the height of the pandemic, crude oil rose back near $50, paring the annual decline to 20.5%.

Front-month live cattle futures fell 9.4% in 2020, while lean hogs were down 1.6%. But both markets ended the year more than $32 above their April lows.

Record-low interest rates and green shoots of an economic recovery pushed the U.S. dollar index down 6.7% to the lowest point in 31 months. Further dollar weakness and inflationary hedges should keep support under in the grain markets until big U.S. crops are assured.