Chart of the Week

Growing disruptions in grain exports and elevated production costs are creating global supply concerns. Russia and Ukraine together accounted for roughly 30% of global wheat exports in 2025, with most shipments moving through the Black Sea. Since July, escalating attacks on grain terminals and shipping infrastructure have disrupted exports, raising concerns about whether supply can efficiently reach global markets.

Energy markets have also played a key role in the rally. Elevated diesel, fertilizer, and other farm-input costs have increased production expenses across the agricultural sector. As the chart shows, nearly every major agricultural commodity is posting double-digit gains year to date, while wheat prices have surged to their highest levels since 2022.

In our view, these risks are unlikely to disappear anytime soon, as the path toward a resolution in the Russia-Ukraine war remains unclear and ongoing refining challenges drive elevated input costs for producers. Broad commodity exposure may offer a way to hedge against further increases in food and energy prices. We remain favorable on Commodities and view pullbacks as opportunities to add exposure, given our forecasts for additional upside in the Bloomberg Commodity Index through 2027.

Each asset class has its own risk and return characteristics. The level of risk associated with a particular investment or asset class generally correlates with the level of return the investment or asset class might achieve. The commodities markets are considered speculative, carry substantial risks, and have experienced periods of extreme volatility. Investing in a volatile and uncertain commodities market may cause a portfolio to rapidly increase or decrease in value which may result in greater share price volatility.

Bloomberg Commodity Index is comprised of 22 exchange-traded futures on physical commodities and represents 20 commodities weighted to account for economic significance and market liquidity.

Bloomberg Agriculture Subindex is a commodity group subindex of the Bloomberg Commodity Index. It is composed of futures contracts on coffee, corn, cotton, soybeans, soybean oil, soybean meal, sugar and wheat. It reflects the return of the underlying commodity futures and is quoted in USD.

Bloomberg Grains Subindex is a commodity group subindex of the Bloomberg Commodity Index. It is composed of futures contracts on corn, soybeans and wheat. It reflects the return of underlying commodity futures price movements only and is quoted in USD.

An index is unmanaged and not available for direct investment.

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