Rabobank, Monthly Agri Commodity Markets Research, January 2021
CBOT G&O prices launched out the gate in 2021, reaching their highest prices since 2014 as supplies continued their decline from last year. Global demand continues to be strong,and the weather is imperfect, leaving a precarious balancing act until resupplies arrive in major exporters. Non-Commercials are piling into an inflation bet and acreage is competitive with many G&O products in contraction; consumers should be prepared for a risk-filled year. Meanwhile,coffee and sugar prices also rose in the wake of stronger-than-expected demand,the effects of drier-than-normal weather in Brazil in2020, as well as astronomical container shipping rates.
Wheat
CBOT Wheat forecast increased on weather risks, export taxes, and continued strong export demand. Weather in Russia and the US continues to be a concern. The USDA estimates EU+UK ending stocks to reach the lowest levels in almost 40 years on good exports, supporting prices at elevated levels
Sugar
The recent upside is probably overstated but likely to stay until Brazil starts harvesting again. Raw sugar saw a surprising upside in December and January, aided by fund buying and higher oil prices. The upside is replicated in a number of commodities, but demand has also been very strong
Corn
Our November 2020 high-case scenario of USD 5.50/bu CBOT Corn comes into view. Production losses and record demand leave a narrow bridge for supplies to navigate in 2021. For a second consecutive quarter, the USDA found US bins far emptier than expected, raising export worries.
Coffee
The coffee price forecast has been slightly increased. Brazilian weather continues to pose a problem with expectations for the crop varying widely. We remain friendly toward robustas, particularly now that Vietnam’s shipments are delayed.
Soy complex
CBOT Soybean’s parabolic trajectory was stabilized late last month by South American moisture. Brazilian soy production remains partially delayed and dry, but recent moisture improvements staved off worst-case scenarios and together with high US acreage should prevent an inflationary spiral.
Cocoa
The cocoa forecast has been raised to reflect the market, but remains bearish, with recovery seen in Q3 2021. Higher grind suggests demand recovery is on track. Global surplus seen expanding on good/normal weather in all crop regions
Palm oil
Relatively low Malaysian palm oil inventories will support palm oil prices in 2021. Palm oil prices to peak in Q1 2021. Malaysian palm oil inventories will remain relatively low in 2021. Implementation of Indonesian biodiesel mandates of 9.2m kiloliters remains uncertain in 2021.
Cotton
ICE #2 Cotton forecast is revised higher on cuts to the US balance sheet and unfixed old crop call sales. ICE #2 Cotton futures rose above USc 80/lb in January –the first time since December 2018. Rabobank forecasts support to persist across cotton futures, at least in the short term.
Georgina Poole
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Rabobank Australia & New Zealand
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Email: georgina.poole@rabobank.com
