Agriculture Commodities: Then and Now

At the start of the 21st century (approximately 2002–2012), commodities broadly went through a massive investment cycle. Given the cycle drove run-ups in the price of most every commodity market, including both agricultural and non-agricultural commodities, this cycle is commonly referred to as a commodity “super-cycle.” This period was powered by increased demand for commodities broadly from emerging markets, primarily China’s rapid industrialization and urbanization at the time. Increased demand drove prices higher, as the supply impulse couldn’t respond quickly enough. However, in typical cyclical industry fashion, that supply response did eventually come, creating a “Lost Decade” (approximately 2012–2020) for commodity price performance. The incremental global supply that came to market coincided with several headwinds, creating a “double whammy” for commodity markets broadly. Those headwinds included: decelerating growth from China; a stronger dollar; lower energy costs from the U.S. shale boom; and waning institutional investor interest in commodity investments. Additional headwinds, specific to agriculture, include technological advances in farming and some of the best growing conditions seen in a century. The “Commodity ‘Super-Cycle’ and ‘Lost Decade’ Defined First Two Decades of 21st Century” chart illustrates cumulative returns for agricultural commodities during these periods.

Agricultural (Ag) commodities typically do not receive the level of press coverage as energy or precious metals, and the performance of ag commodities has slightly lagged behind them. However, the post-COVID-19 performance has certainly been strong enough to declare that the “Lost Decade” for the commodity complex writ large is over. Cumulative performance of the three commodity segments, as well as a broad index of commodities, is illustrated in the “Commodity Markets Recover in the 2020s (April 2020–May 20, 2026)” chart.