The year 2021 proved to be a prosperous year for the entire value chain participants of the Agri sector. The agricultural commodities have trended upwards since the beginning of 2021. The trend strengthened mainly because of the demand recovery and after a brief correction between August end and mid-September, the agricultural commodities have resumed the upward trend.
The year 2021 proved to be a prosperous year for the entire value chain participants of the Agri sector. The agricultural commodities have trended upwards since the beginning of 2021. The trend strengthened mainly because of the demand recovery and after a brief correction between August end and mid-September, the agricultural commodities have resumed the upward trend.
The unlocking of economies continued, therefore trade-related activities kept picking up. Edible oils such as soy oil and palm oil achieved record highs in 2021 with similar performance of oilseeds such as castor, RM seed and soybean. Cotton was also successful in posting new highs. Calendar year 2021 also witnessed the guar complex registering sharp gains after a consolidation phase for more than 2 years.
When comparing December 2020 closing prices with that of December 2021 prices, the benchmark contracts of soybean appreciated by 43 percent nearly.
Cotton and cotton cake are up by 65 percent and 35 percent respectively. Likewise guar seed had appreciated by 53 percent. Jeera, turmeric and dhaniya closed with gains of 28 percent, 62 percent and 52 percent respectively. Castor on the other hand was up by around 27 percent.
The Agricultural markets are likely to remain supported in 2022 because of upward pressure on global food prices, stimulated by reports of unpredictable weather, rising consumer inflation, and energy and labor crisis. As the costs of fertilizers and other input costs are increasing, farmers’ cost of production are climbing as well. Despite the emerging threats of the new COVID-19 variant, China is well on track to achieve economic growth, exceeding its set target of above 6 percent this year. The country is able to control its inflation and the economy has continuously recovered in 2021.
Global commodity markets are highly influenced by the performance of the Chinese economy and that will remain a key driver of the agri markets.
The Omicron Covid variant is not likely to disrupt global growth significantly so we expect an overall positive bias for most of the agri commodities. The vaccination rates have increased while the world appears to be quite experienced now, in terms of dealing with the pandemic threat. India’s export prospects for cotton and spices remain higher for 2022, while edible demand may see growth in consumption, once the food service and hotel industries resume their operations fully. In all, we expect most of the agricultural commodity prices to remain above the 2020-2021 average levels.
