Volatility in agri commodity prices looks set to continue into 2013, according to a report from Rabobank's Agri Commodity Markets Research department. This will be particularly true for grain and oilseeds markets, with a supply squeeze in the first six months expected to push prices higher, before an expected production rebound leads to a weakening in prices in the second half of the year.
The report says soymeal is the commodity likely to show the largest price decline by the end of 2013. In contrast, Rabobank analysts expect palm oil to be the strongest performer, as Chinese imports and biofuel demand drive prices higher after the sell-off in 2012. The soft commodity markets should continue in the same vein as this year, with prices expected to be relatively range bound.
Luke Chandler, Global Head of Rabobank's Agri Commodity Markets Research (ACMR) department, said, ''Weak global economic growth and continued macro uncertainty may cause a slight drag on demand for agricultural commodities in 2013; however, a low US dollar will provide support for prices. Speculative money flows will also remain very sensitive to macro uncertainties with the risk-on/risk-off trading pattern of 2012 likely to continue. Using the S&P Agri Index as a proxy for our commodity forecasts, we expect a decline in agricultural prices of around 10% between Q1 and Q4 of 2013.''
Rabobank has also come out with predictions on agri commodities for 2013. The same are as follows:
Cocoa - Cocoa prices are expected to move sideways to slightly higher in 2013 amid tightening fundamentals.
Coffee - Coffee prices are expected to increase in 2013 finding support from increasing global demand and tightening stock levels.
Corn - We expect CBOT corn prices to fall 24% from Q1 2013 to average USD 6/bushel in Q4 2013 during the US 2013/14 harvest. Despite the bearish outlook, the beginning of 2013 is expected to see prices rise from current levels to encourage further demand rationing in the US.
Cotton - Global cotton prices are forecast to plateau in 1H 2013, as the market faces its largest ever period of oversupply, before the curve lifts modestly by year end.
Palm Oil - Palm oil prices are forecast to rise in Q1 2013 as stocks are drawn down from record high levels, before falling later in the year as palm oil and soybean output rebound.
Soybeans - Soybean prices are expected to remain supported in Q1 2013 on tight export supplies before declining as production rebounds later in the year, with prices for the year averaging below 2012 levels.
Soymeal - CBOT soymeal prices are likely to drop by nearly USD 75/ton from current levels by the end of 2013 as demand slows.
Soy Oil - Soy oil prices are forecast to remain rangebound at the beginning of 2013 on high US supplies, before increasing in mid-2013 as supplies are drawn down.
Sugar - Sugar prices (ICE #11 contract) are forecast to ease 5% over the next 12 months as world sugar supply reaches a net surplus of 5.9 million tonnes.
Wheat - CBOT wheat prices are forecast to rise to USD 9.10/bushel in Q1 2013 and then fall 23% to USD 7.00/bushel by Q4 2013.
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