InvestorQ : Are alternate products a risk for agri commodity futures?
Isha Tharwani made post

Are alternate products a risk for agri commodity futures?

Answer
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Anu Biswas answered.
2 years ago


Rise of alternatives is a key risk for agri commodities. The world is constantly innovating and finding new ways to meet changing demand patterns. Demand patterns also change because people become more health conscious. We have seen that happen in India in case of edible. There has been a major shift in demand pattern out of groundnut and domestic oilseeds towards palm oil and soya bean oil.

There are also alternate applications that become relevant at different points of time. For example, sugar, palm oil and corn all have alternate uses in the sense that they are also useful inputs in the manufacture of bio-fuels. Depending on the shifting demand patterns and shifting pricing economics, the price of agri commodities can be largely impacted by alternate applications.