The tightest grain inventories are creeping upon us as the war in Europe causes further chaos.

Despite the resumption of exports from Ukraine, the tightest grain inventories are heading our way. The number of shipments is not enough and harvests from other major crop producers are smaller than expected. The poor weather conditions are adding to the fire in key agricultural regions such the US, France and China, it’s shrinking grain harvests and cutting inventories (investing.com). Increasing the risk of famine in some of the world’s poorest countries. By the end of the 22/23 crop year, the world’s capacity of corn will be enough for only 80 days’ worth of consumption. That is 28% less than 5 years ago and lowest since 2010/2011, really worrying some of the policymakers (investing.com). Furthermore, EU production is expected to hit a 15-year low. Such decline will lead to the bloc increasing imports from Ukraine by approximately 30% from the previous year to 10.4 million tonnes (investing.com).

The World Bank has allocated $30 billion to help counteract food shortages affected by the war. In addition, Joe Biden has announced almost $3 billion in further funding to combat global food uncertainty (investing.com).

Retail vs institutional investors

When it comes to investing usually investors will usually fall into two categories, retail and institutional. There is a very good chance that if you are reading this you are a retail investor, but this isn’t a bad thing.

So what is each categorisation?

A retail client or non-institutional client would be an investor who buys or sells any form of debt, asset, equity, commodity or financial instrument through a bank or broker. Usually, retail clients are managing their own money and are driven to invest for either their own personal future, retirement or a large purchase. In the UK a retail client is subdivided into Pro-retail and retail. The everyday retail investor can come along and invest in assets, derivatives or commodities provided they meet the broker's minimum requirements. The FCA does outline the general minimum criteria which involve being over 18, having an income and savings and specific residency status.

A pro-retail client is the middle step between institutional and retail. To be classified as a professional investor the FCA would require that the client has over €500k invested, is qualified or works within the financial area and has traded on the stock market at a significant volume over the past 4 quarters. The advantages between retail and pro-retail include having reduced fees and charges, lower margin requirements and access to markets that a usual retail client may not have access to.

Institutional investors or per se professional clients are often an institution, money managers, pension funds or banks. Institutional investors make up over 85% of the volume traded on the NYSE so they have a serious influence on what the market does, hence the categorisation. Quite often firms in this category needed to be regulated by the government’s financial bodies of the country in which they operate. This is to ensure market manipulation does not occur. Becoming an institutional investor in the UK requires some serious money behind you. In the UK the FCA stipulates a minimum of €20m on your/the company’s balance sheet, €40m turnover or €2m of owned funds. Because of their size, institutional investors often have the ability to negotiate fees and access investments that retail clients simply cannot afford.