Article / 27 August 2015 at 13:00 GMT

Agricultural commodities trending lower

Chief Investment Officer / ACIES Asset Management
  • Farm commodities markets are generally bearish
  • The trends for most are solidly downwards
  • Oats and soybean oil markets illustrate the point
  • Clear trends offer shorting opportunities

  Doesn't look like a good investment, does it? Photo:iStock

By Andreas Clenow

This whole agricultural commodities sector is falling (See sector table below). It's been declining for a very long time and it just keeps falling. 

But it has been a money-maker for the trend-following community, by simply staying short a broad range of agricultural commodities.

It seems abundantly clear where this sector's markets are heading. None of the important markets is heading up. 

At best, they're just slowly heading down instead of falling rapidly. The table below provides an overview of the state of the sector. Not a pretty sight.

Agricultural sector trending overview


The table above shows a sector in total disarray. If that's not a bear market, I don't know what is. While the financial markets are erratic, clear trends are found here, in the agricultural space.

Almost everything in this sector beckons to be shorted. There are two main factors at play, as usual in commodities. Spot prices are falling, but most of the markets are also in contango, which puts further long-term pressure on the futures markets. 

Take the oats market for example. The price chart below shows a full year and almost a 45 degree trend down. The term structure in the third chart explains much of the long-term profile of this market.

Oats dashboard


Coffee is another case in point as that market is setting new lows. (Link here to read Andreas Clenow's Trade View on coffee published earlier today.)

A very different commodity that shows a similar pattern to that of oats is soybean oil. It was falling less steeply earlier in the year, but for the past few months it has been in freefall mode. This too is very much driven by its own term structure. The dashboard below shows how the soybean oil market looks at the moment.

Soybean oil dashboard
soybean oil


These are not extreme examples chosen to exaggerate the situation. These are random examples in a long list of very bearish markets in agricultural commodities. 

Are you tired of unpredictable financial markets? Did you get burnt on the choppy moves in equities? Farm commodities may be able to offer your portfolio some much needed diversification. As long as you stay on the short side, that is.

– Edited by John Acher

Andreas F. Clenow is a hedge fund manager and chief investment officer at ACIES Asset Management in Zurich.
BertoLoloyse BertoLoloyse
This comment has been redacted


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail