In ‘Outlook 2015: Rebalancing after finding the lows’, Rabobank analysts say bumper harvests of most grains and oilseeds have improved world supplies, cocoa stocks are “projected to build somewhat”, and “record-large stock levels will continue to hang over the sugar and cotton markets through 2015, limiting the extent of price recovery”.
Coffee and beef prices to remain firm
However, beef supplies will remain low in 2015 (US cattle numbers are predicted to decline further in 2015), and coffee supplies will also remain tight, meaning prices of both will likely remain steady, predicts the bank.
And for beef, says Rabobank, “With record tight supplies of all classes of cattle in North America, any surprises in production could send the market into a continuation of price advances… and drive lean beef prices to new record levels.”
As for coffee, it warns: “Given the fragile situation of coffee trees in Brazil, a major decrease in production is not yet out of the question if adverse weather persists or intensifies. If realized, the supply situation could become truly critical, driving prices high enough to curb demand.”
Palm oil prices expected to rise
Palm oil prices, meanwhile, are expected to rise as growth in demand outpaces the growth in production, while corn prices are also predicted to rise slightly as increased production in the US is offset by cutbacks in Brazil, Argentina and Ukraine.
Key variables will be the strength of the US dollar, Chinese demand (Rabobank expects a downward revision of China’s 7.5% annual growth rate in 2015 buts says import demand remains uncertain), slowing demand for biofuel, and weak oil prices.
Chairman of the executive board Wiebe Draiijer added: “The wide price swings of previous seasons are not expected to be as pronounced in the year ahead, as stock levels have improved. However, agri-commodity markets will still remain volatile in 2015 as stocks are not yet at levels to buffer significant supply or demand shocks."