Agricultural Commodity Market Review & Outlook 2021

2020 Recap of Agricultural Commodities: The COVID Pandemic was the major bearish trigger for Agricultural commodity markets during first half of 2020 and the entire world was uncertain about the futures of global economy during that period.

All of the NCDEX/MCX traded Agri commodities trended lower & established yearly lows during the above-mentioned period. The bad phase started was over by end of June, when lots of confusions regarding the control and cure of the deadly virus were eradicated. At the same time as unlocking restrictions were being removed, economy of different countries started improving resulting in overall demand in all commodities specially the edible Agricultural commodities and post June most of these commodity futures were near to the levels, when the pandemic problem emerged. It was clear to the world that demand for cereals/pulses oilseeds/fruits/vegetables etc. will always exist since these are the daily consumable items. 

The second half of 2020 saw  markets resumed upward trend as demand recovered near to the Pre-Covid levels, in addition to participants focusing on the core fundamentals of the respective Agricultural commodities. The year saw impressive gains in the oil complex basket with RM seed, Soya oil and CPO posting new highs. Another key feature was that sowing activity was not affected despite the lockdown restrictions, due to efforts taken by the government and sowing area of the major Kharif crops had been above last year. Even the Rabi crop sown area remains better year on year.  

OUTLOOK FOR 2021: Unlocking of economic activities can continue as the pandemic control possibility improves gradually. As such demand for most commodities may remain healthy. The fiscal and monetary stimulus continues encouraging a number of investors, who are constantly looking at agricultural commodities as investment assets. Demand from China, the biggest consumer has been robust and most countries are stepping in to ensure adequate supply of agri commodities.

Thus global inventory may continue falling. Also, the La Niña threats prevail and expected to continue therefore creating challenges for farmers around the globe, and ultimately worsening the availability of various agri commodities. All in all 2021 appears to be positive for Agri commodities from pricing perspective.