• Investors are fully focused on the Northern Hemisphere summer
planting season, which could complicate matters for a market that
is already laden with excess supply. If benign weather materializes,
we forecast further downside for grain prices from current levels on
a 12-month basis.
• A fading El Niño and an even chance of a La Niña event by year-end
lower the risk of a weather event interrupting Northern Hemisphere
crop production. But a further increase in the likelihood of La Niña
is a material risk to our negative stance on grain prices.
• While we have a bearish view on grains, we retain a neutral stance
on softs and livestock. Our least preferred commodity is soybeans,
while cotton is our most preferred over 12 months. Within equities,
our least preferred sector is fertilizers, and our most preferred is
protein producers.
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