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Exchange-traded funds (ETFs) commodity markets experienced a sharp pull-back during the early part of May, in what was the most feverish bout of profit-taking for well over a year. Although the direction of silver and oil prices hogged the headlines, there was also evidence of a sell-off in agricultural investment vehicles when markets became convinced that prices for a range of staples had topped during March.
The scramble to gain exposure to agricultural markets prior to March can be gauged by inflows into US agricultural ETFs, which reached $984m (£600m) during February - a fivefold increase over the last months of 2010.
Now, with Northern Europe experiencing its worst drought conditions since 1976, the CRB Grains & Oilseed index is again challenging its March highs, and is only 9 per cent down on the index high of 2008. Although Russian produce has re-entered global grains markets, much will depend on US summer yields, and the extent to which China's predicted shortfall swallows up surplus production.
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Source: investorschronicle.co.uk