“Sell in May and go away” is usually something of a share market aphorism.

… the idea being that stock markets tend to underperform over the summer and early autumn – which actually has some validity, at least when it comes to the S&P 500 index.

But for 2022, it looks like investors applied it to agricultural commodities too.

One of the May market themes for ags was reversal, in terms of some of the sector’s early-year stars falling back to earth, dragging the Bcom ag subindex lower for the first time in six months.

Gravity effect

Palm oil’s 11.3% tumble in Kuala Lumpur, for instance, was its worst monthly performance in more than two years – since the early days of the Covid scare, in fact.

Ditto soyoil, which plunged by 12.6% in Chicago.

And this despite the bravura performance by crude oil which might have been expected to have offered support, in boosting the value of biofuels which are largely made from vegetable oils.

Gains booked

It looks like investors were keen to bank some profits, particularly as Indonesia eased the handcuffs on its palm oil exports.

Hedge funds cut their long bets in Chicago soyoil futures and options by more than 20,000 lots in the four weeks to May 24, the latest data available.

Even so, long-term bulls are still sitting on healthy profits. For 2022 as a whole, soyoil futures remain one of ags’ top performers, with prices up 38% as of Tuesday’s close, with palm oil showing 34% gains.

Powder sparks

By contrast, investors eased up on selling in whole milk powder futures, which on the NZX SGX market plunged by 24% in the two-months to mid-May.

Late-month buying pushed the contract back to positive territory for 2022.

Support has come from worries over milk production, notably in the northern hemisphere where the annual “spring flush” in output has shown signs of being a busted one.

European Union volumes shrank by 1% in March, to take first-quarter deliveries to a 0.3% decline, European Commission data on Tuesday showed.

Spring wheat springs

Wheat was one ag which maintained (upward) direction, with Chicago soft red winter wheat futures appreciating for a fourth successive month, amid worries over the drought-hit US winter wheat crop, and some concerns over a lack of rain in parts of Argentina and Europe too.

This besides, of course, the squeeze on Ukrainian exports thanks to Russia’s invasion.

Still, it was actually rain and cold which spurred the outperformance in Minneapolis spring wheat, as the ideal planting window closes in the northern US growing belt with a stack of sowings yet uncompleted.

Data overnight showed US farmers having completed 73% of their spring wheat plantings as of Sunday, 19 points behind the average pace, and slower than any other year this century bar 2011.