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!