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Stability or more volatility for 2013? - 4 December 2012

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Tuesday 4th December 2012.
Sarah Mikesell - TheCropSite Senior Editor

Sarah Mikesell
Senior Editor


Stability or more volatility for 2013?

Greetings from a very balmy Midwest, USA! Many areas from the Rockies to the eastern Midwest down into the South have been experiencing temperatures that are 10 to 30 degrees (F) above average for early December.

The temperature here on Monday showed 70°F (21°C), and my kids are already asking if Santa will come if it stays this warm. It seems at least the central part of the US is likely to see Santa - forecasts indicate the warm weather will come to an abrupt end today and start dipping lower.

Rabobank has released a report predicting that 2013 will bring more volatility, particularly for grain and oilseeds markets. A supply squeeze in the next six months should push prices higher, before an expected production rebound leads to a weaker in prices July to December.

Rabobank expects a decline in agricultural prices of around 10 per cent between Q1 and Q4 of 2013, due to weak global economic growth and continued macro uncertainty. However, support is expected from a low US dollar.

The report said soymeal is likely to show the largest price decline by the end of 2013. 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.

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. Higher prices should encourage record plantings of row crops in the US during 2013. However, lingering US drought remains a key risk to this surplus.

Rabobank's 2013 Predictions

  • 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 per cent from Q1 2013 to average $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 $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 per cent 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 $9.10/bushel in Q1 2013 and then fall 23 per cent to $7.00/bushel by Q4 2013.

To read more coverage of the Rabobank report, click here.

Have a great week!

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Market Reports

USDA GAIN: Jordon Grain and Feed Annual 2012
USDA GAIN: Republic of Korea Rice Production Revision
USDA Crop Progress - 26 November 2012
USDA GAIN: Indonesia Oilseeds and Products Update 2012
Australian Weekly ABARES Report - 29 November 2012
USDA GAIN: Australia Cotton and Products Voluntary - November 2012
USDA GAIN: Uzbekistan Wheat Update - November 2012
USDA Outlook for U.S. Agricultural Trade - November 2012
IGC Grain Market Report - November 2012
Irish CSO: Agricultural Price Indices - 2012 - Preliminary Estimates
USDA GAIN: Thailand Weekly Rice Price Update - 30 November 2012
UK Total Income from Farming 2011 – 2nd Estimate
USDA GAIN: Pakistan Cotton and Products - November 2012
USDA GAIN: Brazil Cotton and Products Update - November 2012
USDA Agricultural Prices: November Farm Prices Received Index Down 6 Points
USDA GAIN: India Grain and Feed Update - December 2012
USDA GAIN: Viet Nam Grain and Feed Update December 2012

Global Crop Industry News


FAO, Haitian President Urges Increased Investment in Haiti


Rabi Crops Sown in 280 Lakh Hectare so Far
Indian Government Releases 70.00 Lac Tons Sugar for Open Market
Extension of Subsidised Farm Loans to Farmers
International Cotton Prices Decline


Thai Rice Export Prices Unchanged
Little Change to Thai Rice Prices

   United States

USDA Study Shows Trends in Public and Private Agricultural R&D
CME: Corn Futures Closed Higher Tuesday
CME: Corn Futures Closed Higher Wednesday
CME: Corn Futures Closed Lower Thursday
Sources of E. coli Are Not Always What They Seem
USDA Grain Review: Wheat Leads Markets Higher
Grain Hedge: Grain Rallies Meeting Resistance
GeoGrain: Barge Restrictions Loom Over Basis Market
2012: US Crop Year-End Review
US Agricultural Exports Soar Higher
US Agricultural Trade to Hit Record Levels
Secretary Vilsack Reponds to Soaring US Exports
CME: Corn Futures Closed Lower Friday
$25.2 Million Funding for Next Generation Cassava Breeding
CME: Corn Futures Closed Higher Monday
Purdue Workshop to Tackle Issues Faced by Family Farms


Indonesian Rice Imports Expected to Increase in 2012
Indonesian Soybean Meal Exports Forecast to Rise


Spanish Water Reserves More Than Half Full


China's Corn Harvest Hits Record High
Official Calls for Steps to Protect Farmland

   Korea, South

Downward Revision of South Korean Rice Production


Jordanian Cereal Production Negligible

   United Kingdom

UK Winter Cereals and Oilseeds Down?
Insurers Count Cost of UK Downpour
Banks Made Aware of Weather Impacts on Businesses
Farming Can Meet 3m Tonne GHG Reduction Target by 2020
Total Income from Farming Rising


The Need for Phosphate Fertiliser in Alberta
State Encourages Innovation in Processors and Producers

   New Zealand

Federated Farmers Flags Biosecurity Issue


Philippines, Rice Institute Sign Agreement on Food Security


Major Breakthrough in Deciphering Bread Wheat’s Genetic Code
US, Mexico Sign Landmark Water-Sharing Agreement for Colorado River
Mixed Picture for Global Grains Market
Rabobank 2013 Outlook: Markets Remain Volatile, Fundamentals 'Rebalance on Tightrope'

   Russian Federation

Cherkizovo's Revenue Passes US$1-Billion Mark


Irish Agricultural Production Costs Rise


Australia's Wheat Exports to be Deregulated
Australia's Cotton Crop Revised Downwards


Uzbekistan Wheat Production Rises


Pakistan Cotton Revised Downwards

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