With the abrupt and steep stock market decline over the past week, perhaps it would be expected grain-based foods shares, which historically have been treated as defensive investments in the stock market, would be outperforming again. Indeed, the G.B.F. share index did not fall as steeply as the broader market, though the spread was not a wide one. In the five trading sessions dating back to the initial market swoon of Feb. 2, the grain-based shares were down 7%, versus 9% for the S.&P. 500. Of the 25 companies in the Grain-Based Foods Share Index, only four ended higher for the five-day period, versus the closing price Feb. 1.
While grain-based shares performed nearly in line with the rest of the market to date during the correction, it remains to be seen whether the downward trend will continue and, if so, whether food shares will gain greater favor. Industry shares had been sustained in part by low interest rates, and growing concern about the prospective pace of rate increases has contributed to share price weakness in the sector and the overall market. The intensity of the market correction and the declines in grain-based shares are understandable cause for increasing nervousness.