Sunday, December 10, 2017

Rabobank's 12 Month Outlook For Agri Commodities (compared to spot)

Over the years we've found Rabo to consistently rank among the better agricultural commoditiy analysts among the banks. They're pretty good at the Dutch economy as well, although ING gives them a run for their money there.

From the Nov. 21 press release:
And the release itself:

Rabobank: Weather event among threats to global food price stability in 2018
Weather phenomena, trade headwinds and currency fluctuations could disrupt the global food price environment during 2018, according to research from Rabobank, the specialist food and agribusiness bank.
  • La Niña weather phenomenon could disrupt crops across key regions and cause food prices to spike
  • Producers also face trade risks from increasing freight and input costs along with fluctuating currencies
  • Strong demand expected for coffee and cocoa; bullish outlook on wheat with rising consumption eating into stocks after US acreage record lows 
There is currently as much as a 75% chance of La Niña conditions strengthening and lasting the northern hemisphere winter, according to the US-based National Oceanic and Atmospheric Administration. The phenomenon could bring extreme heat and dryness to grain areas in the Americas and flooding to Asia’s palm oil plantations.
In its annual Outlook report, Good Buy, Low Prices, which analyses prospects for 13 agricultural commodities, Rabobank says that while global stocks are historically well-supplied, balance sheets are tightening, exacerbating the potential impact of shocks.
Alongside weather, other factors pose a risk to the stability of global food prices, according to Rabobank.
Trade is set to continue to play a key role in price volatility. Global freight costs – in the form of the Baltic Dry Index – and oil prices are both rising and there remains uncertainty over US policy towards NAFTA and the UK’s future trading relationship with the EU and other nations.
In currencies, the prospect of further interest rate increases in the US raises the chances of the dollar appreciating, making American exports of key commodities such as wheat and soybeans less competitive....MORE