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Macro

Recessions affect commodity markets, with sugar, coffee, soybeans, corn, wheat, and energy being influenced by factors like supply, demand, weather, and price fluctuations.

Sugar

The global sugar balance for 23/24 is expected to be a deficit, limiting potential losses from an economic downturn, despite the bearish risk of weather improvements.

Coffee

Historical data shows that coffee prices tend to decline during recession periods. The global coffee balance is currently in a deficit. However, an optimistic perspective for the 24/25 crop in Brazil, both for arabica and robusta, weighs on the future curve. Weather conditions, especially the El Niño window, will remain a key factor until the end of 2023.

Soybeans and Corn

During recessions, soybeans and corn are impacted by supply, demand, and economic factors, with consumption typically lower than predicted, and this year the US soybean market may be supply-driven while corn could be more recession-exposed.

Wheat

Wheat, as a staple food, is generally less affected by recessions, but supply-driven price fluctuations can be intensified during economic downturns, influencing consumer behavior, although minimal effects are expected in a mild recession this year.

Energy

The energy sector’s correlation with global economic growth, oil price fluctuations, inflation, interest rates, and the inverted US yield curve signals potential disruptions in the oil production and exploration market.

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