Commodity Markets

Fewer Chickens Eat More Corn

Two trends to watch in agricultural commodities are chicken supply and corn demand. Bird flu is being reported in East Asia and Western Europe, leading to chicken-import bans. Hong Kong restricts poultry trade with China and Japan; Saudi Arabia is acting against France and the Netherlands. The list is growing. Meanwhile, American farmers may be overloaded with corn if the Trump administration rescinds the contentious ethanol mandate. Around 40% of domestic corn supply is used for biofuels. A corn glut in the US will impact key producers like Brazil, Ukraine, and Argentina. More generally, investors should watch agricultural commodities for unexpected price turns this year. Insiders may have trouble adjusting their forecasts for growth uncertainty in China, as well as enormous stockpiles there in some commodities.

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