Weak demand adds to pressure from ample supply

The S&P GSCI Agriculture Commodity Price Index has begun 2015 the same way it finished 2014 – on a downward path. The index has fallen 4% since the start of the year, dragged down by a near 10% drop in the price of wheat. Moreover, the majority of agricultural commodities have seen prices decline. Hopes that demand would recover and counteract bulging supplies have been disappointed. Agricultural commodity prices have also come under downward pressure from the fall in the price of oil and further strengthening of the US dollar.