The investment binge in U.S. agriculture funds has ceased as record breaking crops and improving meat supplies propel prices downward.
Agriculture took in more money than precious metals and energy fund during the first five months of 2014. Agriculture had a net outflow for the year of $57.7 million as of Aug. 29, which is down 2.9%, Bloomberg data shows.
Energy, industrial-metal, precious-metal and broad-based funds saw net inflows over the period, which boosted total raw-material invested by $341 million, or 0.5%, Megan Durisin with Bloomberg reported.
Coffee, cattle and hogs posted gains that beat most commodities this year, but cotton, soybeans, corn and wheat fell into bear markets.
Farmers expect to reap a record 14.032 billion bushels of corn and 3.816 million bushels of soybeans, according to the USDA on Aug. 12. On Aug. 24, crop conditions were the best in at least two decades at the same time, the USDA said. Futures for both corn and soybeans reached four-year lows on the Chicago Board of Trade since the end of June. They are down more than 30% from this year’s highs, Bloomberg reported.
The Bloomberg Agriculture Index of seven farm products, not including livestock, has dropped 21% since the end of April, whil the Bloomberg Commodity Index of 22 raw materials dropped 8.6% of the same time period. The MSCI All-World Index of equities rose 4.1%, while the Bloomberg Treasury Bond Index rose 2.1%.
Agriculture might bounce back. Corn and soybean harvest are still a few weeks away in the U.S., which means that weather damage from rain or frost could still be a factor, Durisin reported.
The Pro Farmer Midwest Crop Tour estimated the soybean crop at 3.812 billion bushels, which is less than the USDA estimate. Crops in both Minnesota and South Dakota looked “average,” the group said on Aug. 22.
Wheat futures rose 0.2% last week, the first gain in three weeks.
More than a third of Texas is still in severe drought as of Aug. 26, according to the U.S. Drought Monitor. Durisin reports that cattle futures are up 12% this year. Feeder cattle have also gone up 29%. Hogs have gained 15%, even as cheaper grain has reduced the cost of animal feed.
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