Chartered Financial Analyst Level 2

Explanation

Seasonality primarily influences the flow of grain commodities because:

• Grain commodities (like wheat, corn, soybeans) have strong seasonal production patterns due to planting and harvesting cycles
• Weather conditions, growing seasons, and harvest timing create predictable seasonal variations in supply flows
• These seasonal patterns directly affect the flow (production and supply) rather than the stock (inventory) levels

Why not the other options:

• Energy commodities (Option B): While some energy commodities like natural gas have seasonal demand patterns, the flow is not as strongly influenced by seasonality as agricultural commodities
• Base material commodities (Option C): Base materials like metals and minerals are less affected by seasonal patterns in their stock levels, as they can be stored for longer periods without degradation

Seasonality is most pronounced in agricultural commodities where production is tied to natural growing cycles, making Option A the correct answer.