Will grain-based foods shares lose ground in 2017?

For several months it has been apparent that the Grain-Based Foods Share Index in 2017 will underperform the Standard and Poor’s 500 index, ending a three-year streak of besting the principal U.S. stock market benchmark. With a month to go in the year, the only surprise is the gaping size of the performance deficit — 19 percentage points. Also at risk is a remarkable eight-year streak in which grain-based foods shares posted positive gains, unbroken since the market crash of 2008. On Nov. 30, the Grain-Based Foods Share Index closed at 23985, down 248 points in 2017, or exactly 1%.

Consistent with the modest year-to-date decline, shares of roughly half of the companies in the grain-based foods index have moved higher year to date. Shares of five companies have double-digit declines, ranging to 36%, while seven are up double digits, ranging to 49%. A full year accounting will appear in Milling & Baking News early in 2018.

The underperformance of food and beverage shares in 2017 versus the overall market has been attributed to several factors, including a general market rotation toward sectors such as industrials and technology. Of greater concern has been wariness toward food stocks attributed to uncertainty about the sector’s future in the wake of the acquisition of Whole Foods Market by Amazon. The challenge in the year ahead for grain-based foods companies will be to prove they are adapting to major changes under way in the U.S. food market.