Dividend Slump and Ag Market Signals

By Erik Norland, Senior Economist, CME Group

Investors Expect Dividends to Decline in 2020s

• ​​​​Investors expect dividends in real terms  to decline 15.4% by 2031.
• The expectations are based on a compounded inflation rate of 29.4%.
• Dividends grew by an inflation-adjusted 115% from 2010 to 2020.
• Higher bond yields and inflation could pose risk to equity valuations.

Signals from Ag Options and Futures

• Rebound in global economy, inclement weather rally corn, soy, and wheat.
• Implied volatility in corn is at the highest since the 2008-2012 period.
• High volatility in corn, wheat expected to moderate in late 2021.
• Traders expect wide range in prices: from record highs to the lows set in 2000.