Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Rabobank 2013 Commodities Outlook


Rabobank 2013 Commodities Outlook: Agri markets to remain volatile as fundamentals ‘rebalance on a tightrope’

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.

Grain and oilseed prices – corn, wheat, and the soy complex – are forecast to rally in the first quarter of 2013, as a supply squeeze builds pressure and prices are forced higher to ration demand. Current use levels – particularly for corn, wheat and soybeans – appear to be running too fast given the sub-optimal 2011/2012 crops in both the US and South America. Higher prices early in the year will also encourage record plantings of row crops in the US during 2013. Prices are expected to fall in the second half of 2013 as production rebounds, shifting fundamentals into a small surplus. However, lingering drought in the US remains a key risk to this surplus and to consequent production and price forecasts for the year.

Rabobank’s outlook for soft commodity markets – sugar, cocoa and cotton – is neutral to slightly bearish in 2013. Fundamentals in soft commodities are more balanced, and in some cases (e.g. sugar and cotton), surpluses have been built over recent seasons. Despite the support of a weaker US dollar, some soft commodity prices are forecast to fall to multi-year lows in 2013. Record coffee, cotton and sugar crops in 2011/2012 resulted in strong downward corrections in 2012, meaning that the softs have already moved through the cycle expected for grains and oilseed in 2013. The softs markets have now fallen near levels which Rabobank deems as fair value, with expected unwinding of investor short positions and commercial buying to keep markets flat or supported throughout 2013.

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.” Blad

Rabobank makes the following predictions for 2013:

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.

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

SOE Results: TVNZ Lifts Annual Profit 25% On Flat Ad Revenue, Quits Igloo

Television New Zealand, the state-owned broadcaster, lifted annual profit 25 percent, ahead of forecast and despite a dip in advertising revenue, while quitting its stake in the pay-TV Igloo joint venture with Sky Network Television. More>>

ALSO:

Insurers Up For More Payouts: Chch Property Investor Wins Policy Appeal In Supreme Court

Ridgecrest NZ, a property investor, has won an appeal in the Supreme Court over insurance cover provided by IAG New Zealand for a Christchurch building damaged in four successive earthquakes. More>>

ALSO:

Other Cases:

Royal Society: Review Finds Community Water Fluoridation Safe And Effective

A review of the scientific evidence for and against the efficacy and safety of fluoridation of public water supplies has found that the levels of fluoridation used in New Zealand create no health risks and provide protection against tooth decay. More>>

ALSO:

Scoop Business: Croxley Calls Time On NZ Production In Face Of Cheap Imports

Croxley Stationery, whose stationery brands include Olympic, Warwick and Collins, plans to cease manufacturing in New Zealand because it has struggled to compete with lower-cost imports in a market where the printed word is giving way to electronic communications. More>>

ALSO:

Prefu Roundup: Forecasts Revised, Surplus Intact

The National government heads into the election with its Budget surplus target broadly intact, delivering a set of economic and fiscal forecasts marginally revised from May to reflect weaker commodity prices and a lower tax take. More>>

ALSO:

Convention Centre: Major New SkyCity Hotel And Laneway For Auckland

Today SKYCITY Entertainment Group Limited revealed plans to build a new hotel and pedestrian laneway of bars, restaurants and boutique shopping on land it owns in the Nelson and Hobson Streets block, expanding the SKYCITY Entertainment Precinct. More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus

Standards New Zealand

Standards New Zealand
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news