UK analyst: Investing in grain market more attractive than ever
BAKU, Azerbaijan, Oct. 23
By Eldar Janashvili - Trend:
Against the backdrop of unstable situation in the global economy, investments in the grain market are more attractive than ever, Tom Houghton, Head of Ukraine Office of the AgriCensus agency (UK), said at the 11th Global Grain Outlook International Grain Trading Conference in Baku, Trend reports from the event Oct. 23.
Despite that economic indicators of the regional powers in the current period are relatively normal, investors’ expectations and the overall picture of the global economy are quite ambiguous, the analyst said.
In particular, Brent crude oil prices fell again to $55 and there is a threat of war in the Middle East, the danger of collapse in China and the collapse of the currencies of developing countries, including Turkey, Argentina and Brazil, Houghton noted.
Investors are starting to pay attention to risks in the global market, and this draws them to stable sectors of the economy, the political analyst added.
“Maybe the agricultural sector isn’t the best place to invest, but this sector is much more stable than the oil market,” Houghton said.
Touching on macroeconomic indicators of agriculture, the analyst said that the wheat market is at a high level thanks to products from Canada, the US, Kazakhstan and the Black Sea region.
“Wheat prices are mainly intended for the Russian market, and barley prices promise to rise due to lower production in Kazakhstan and Argentina,” Houghton added. “The situation with corn and soy is ambiguous. The figures continue to remain high, but the dynamics begin to fall down. At the same time, Brazil and Argentina continue to increase production, but in 2020 the supply of products should significantly decrease due to weather conditions. Soybean prices are falling in China, Argentina and Brazil, including due to the strong influence of the US dollar.”
The analyst also spoke about the future prospects of the grain market. Thus, referring to the forecast by J.P. Morgan, Houghton said that climate change and water shortages will greatly affect in the future the effectiveness of the global agricultural sector, putting pressure on farmers who will find it more difficult to produce cheap products.
“Supply technologies will have limited investment opportunities,” Houghton said. “Science and technology at some point won’t be able to regulate growth indicators, and in the meantime, population growth will continue. An increase in population along with the growth in wealth will steadily increase the demand for agricultural products.”