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Agriculture In Focus As El Nino Becomes Increasingly Likely
Agriculture In Focus As El Nino Becomes Increasingly Likely. Despite a worsening of the tensions between Russia and the Ukraine, gold ETPs saw outflows last week. However, net flows for the month remain strongly positive as investors remain positioned for a possible deterioration in Eastern Ukraine. While nickel and platinum saw some profit taking in light of recent price rises, with an El Nino event increasingly likely this summer investors favoured diversified agriculture exposure.
Investors seek agricultural exposure ahead of sowing season. ETFS Agriculture (AIGA) recorded US$5mn of inflows last week, the most in 5 weeks, as the probability of an El Nino weather event continues to increase. Last week the Australian Bureau of Meteorology forecasted there is a 70% chance Australia will be affected by this summer for the first time in 4 years. With prices of many agricultural commodities likely to rise as weather extremes disrupt production, investors favoured positions in diversified ETPs. At an individual level, corn and soybeans ETPs saw inflows of US$2.9mn and US$3mn respectively. Corn prices fell almost 6% last week after the USDA improved the outlook for the crop and now expects a 13mn tons surplus in 2014/15.
Profit taking drives US$9mn of outflows from palladium ETPs as price reaches the highest level since August 2011 on geopolitical tension. Meanwhile, despite various attempts being made by producers to find an agreement, the strikes in South Africa are still on-going and have begun to turn violent. While both platinum and palladium prices have been benefiting from the strikes, the palladium price has also been boosted by concerns that Russia may face trade restrictions resulting from its conflict with the Ukraine. With over 40% of world supply of palladium produced in Russia, any restrictions on Russian palladium exports would further constrain an already tight market. Reports on Friday that Russia’s state may be considering buying palladium, if true, would also likely be price supportive.
Gold ETPs see US$18mn of outflows on improved US economic outlook. However, net flows over the past month are positive and stand at around US$73mn as investors remain defensively positioned in light of the risks of a deterioration of the Russia/Ukraine crisis.
Nickel ETPs see over US$6mn of outflows as price plunges 11% in two days. However, most of the outflows were concentrated at the beginning of the week when prices reached a 27-month high on supply restrictions. The nickel price has rallied over 35% since the beginning of the year as an Indonesia’s export ban, coupled with fears of potential sanctions to be imposed on Russia, improved the outlook for the metal. A temporary suspension of production at Vale’s New Caledonia plant further contributed to lift prices at the beginning of the week. However, some investors appear to view the recent jump as excessive and prices corrected towards the end of the week. At the same time, ETFS Zinc (ZINC) saw US$1.7mn of inflows last week, the most in 6 weeks.
Key events to watch this week
This week the focus will likely be on the release of the FOMC minutes from the end of April meeting, as investors will try to assess the likely pace of further tapering and the potential for rate hike. Markit manufacturing PMIs for Germany, the Eurozone and the US will also be coming out this week and could offer an indication of the pace of the recovery in the industrial sector in those countries.
Important Information
This communication has been provided by ETF Securities (UK) Limited (”ETFS UK”) which is authorised and regulated by the United Kingdom Financial Conduct Authority.
Dogecoin’s performance and staying power across multiple market cycles suggest it is not “just another one of those memecoins”.
Over the past decade, DOGE has outperformed even Bitcoin, delivering over 133,000% in returns, nearly 1,000x BTC’s gains in the same period. Despite deep drawdowns during bear markets, Dogecoin has shown remarkable structural resilience.
Following each major rally, it has consistently formed higher lows, a pattern of long-term appreciation and compounding strength.
Historically, Dogecoin has closely mirrored Bitcoin’s movements, often peaking a few weeks after. While 2024 saw Bitcoin dominate headlines following landmark ETF approvals, DOGE still followed its trajectory, though it has yet to stage its typical delayed breakout.
As macro uncertainty continues to fade and momentum returns to the market, retail participation is likely to accelerate, setting up conditions in which Dogecoin has historically thrived.
At the same time, regulatory clarity around Dogecoin has improved. The SEC recently confirmed that most memecoins are not considered securities, comparing them to collectibles. Additionally, they clarified that proof-of-work rewards, like those earned from mining DOGE, also fall outside that scope. These developments further legitimize Dogecoin’s role in the ecosystem, potentially setting the stage for its next paw up, especially as it now holds a firm base around $0.17, nearly 3x its pre-rally level before reaching a new all-time high in the last cycle.
In addition to its long-term performance, Dogecoin stands out as an asset that behaves asymmetrically, offering investors a rare source of uncorrelated returns across both traditional and crypto portfolios. With an average correlation of just 15% to major assets, DOGE’s price action remains largely detached from broader macroeconomic trends, reinforcing its value as a true diversification tool.
Dogecoin demonstrates significant independence within the crypto market, with its correlation to Bitcoin at only 31% and to Ethereum at 37%. This divergence stems from unique capital flow dynamics, where higher-beta assets like DOGE tend to rally after blue-chip crypto assets reach major milestones.
While Bitcoin slowly evolves into a digital store of value and Ethereum powers decentralized infrastructure, Dogecoin remains largely a cultural asset, thriving on narrative momentum and crowd psychology, offering explosive upside when risk appetite surges.
For investors seeking an upside without mirroring the behavior of core holdings, Dogecoin offers a compelling case. Its ability to decouple from market trends while tapping into more speculative surges makes it a powerful, though unconventional, addition to a portfolio with wildcard potential.
Research Newsletter
Each week the 21Shares Research team will publish our data-driven insights into the crypto asset world through this newsletter. Please direct any comments, questions, and words of feedback to research@21shares.com
Disclaimer
The information provided does not constitute a prospectus or other offering material and does not contain or constitute an offer to sell or a solicitation of any offer to buy securities in any jurisdiction. Some of the information published herein may contain forward-looking statements. Readers are cautioned that any such forward-looking statements are not guarantees of future performance and involve risks and uncertainties and that actual results may differ materially from those in the forward-looking statements as a result of various factors. The information contained herein may not be considered as economic, legal, tax or other advice and users are cautioned to base investment decisions or other decisions solely on the content hereof.
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