According to conventional wisdom at the start of this year, the relative performance of grain-based foods shares in 2009 would hinge on whether the overall stock market continued its 2008 slide (meaning outperformance for food staples) or began to recover (translating into underperformance for food shares). Judging by market action through mid-April, the conventional wisdom is quite accurate.
For the first two months of the year, the Grain-Based Foods Share Index, compiled by Milling & Baking News, declined 14%, a strong performance relative to the S.&.P. 500, down 19%. In the seven weeks that followed, grain-based foods shares lagged mightily, climbing 4% versus an 18% gain in the S.&P.
On a year-to-date basis, grain-based shares were down 11%, versus only a 4% decline by the S.&P., perhaps a disappointing cumulative result compared with the early forecasts. Still, as has been noted in this space, the predictability of the performance of consumer staples such as food companies during difficult times should again win appreciation from investment managers anxious to lessen the painful portfolio volatility experienced during the 2008-09 bear market.