Several years of bumper harvests have left key agricultural commodities in abundant supply, helping to drag prices down to levels not seen since 2010. While many prices are probably close to the floor, ample stocks combined with renewed US dollar strength and associated weakness in exporter currencies are likely to constrain any upside. That said, further policy changes in China could reduce import demand for some grains, while a transition from El Niño to a strong La Niña could be the catalyst to push the prices of some agriculturals materially higher.
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