Déjà vu all over again. It was about this time last year that much of the U.S. was engulfed in a crushing heatwave that injected a fair amount of volatility into the commodity world; namely in the agriculture markets. With the U.S. dominating the production of a number of big name crops, the recent heatwave has caught the attention of a number investors looking to cash in on the trend [for more agricultural commodity news and analysis subscribe to our free newsletter].
In the world of agribusiness, there is no name more prolific then Monsanto Company (MON) – the world’s leading producer of the herbicide glyphosate and the second biggest producer of genetically engineered seeds. With a market cap of over $54 billion, investors pay close attention to this bellwether, following the company’s news and key earnings report [for more agricultural news and analysis subscribe to our free newsletter].
When it comes to agricultural commodities, wheat is perhaps one of the most important crops, as this resource is a dietary staple throughout both the emerging market and developed world. Because of this dependence, wheat prices tend to exhibit significant volatility, which can be triggered by a wide array of issues; anything from supply disruptions to extreme weather can easily send the commodity into a tailspin [for more commodity futures news and analysis subscribe to our free newsletter].
On Tuesday, the CME Group announced that it will reduce grain and oilseed trading hours to 17.5 hours from 21 hours. This comes after last year’s largely controversial expansion, which got significant backlash from traders, brokers and agricultural companies alike. Managing Director of Agricultural Commodities and Alternative Investments at CME Group, Tim Andriesen stated that “Over the past several months, we have received significant customer feedback about the current CBOT grain trading hours. While there were varying opinions about what the modifications to hours should be, we believe these changes balance the needs of our diverse global customers based on their feedback” [for more commodity news and analysis subscribe to our free newsletter].
The agricultural industry was hit hard by the most severe and extensive drought in at least 25 years in 2012, which had an impact on crops, livestock and food prices at all levels. While prices have already started to increase in the fourth quarter of 2012, the majority of the impact on retail food prices will likely be seen throughout 2013, according to a recent report by the United States Department of Agriculture (“USDA”) analyzing the drought [for more agricultural news and analysis subscribe to our free newsletter].