Rabobank: 2015 Commodity Outlook


OMAHA (DTN) — Improved world supplies of most grains and oilseeds should mean lower, less volatile prices in 2015, along with narrow trading ranges for many commodities, but growth in consumption, according to Rabobank's commodity market outlook released Monday.

Rabobank expects more balance in fundamentals in commodity markets through the coming year, with narrow trading ranges for many commodities compared to 2014. Also, the lower price levels seen in some commodities should lend themselves to growth in consumption and eventual support of prices.

In the year ahead, the outlook predicts that variables in ag markets will likely include strength of the U.S. dollar and uncertainty in demand from China, which could affect a number of commodities. Also, a combination of sluggish biofuel demand and weakness in crude oil prices will likely allow world grains and oilseeds supplies to outstrip demand next year.

Some of the key drivers next year will be selling and planting decisions by farmers, especially with South American farmers moving from corn to less input-intensive soybeans that are cheaper to produce, and U.S. farmers likely to follow suit. Possible weather-related production risks will also be pivotal this year, with dryness delaying Brazil's soybean planting and continuing dry weather delaying Russian winter grain planting. However, a weak-to-moderate El Nino developing next year could result in above-normal rains in Argentina and southern Brazil if it materializes.

World economic growth may also affect prices this year, as China will not likely meet its targeted growth rate, and the U.S. and the U.K. both expect expansion in 2015. The U.S. dollar has gained ground against other currencies in the last half of 2014 and Rabobank predicts further gains through 2015.

Rabobank's outlook for global agri-commodity markets looks at demand, supply and pricing across international commodities and forecasts price outlooks for the coming year.

Here are Rabobank's forecasts for 12 major commodities.

– Live cattle prices: The outlook appears bullish for 2015 due to tight supply and strong demand; however, the herd may decline by 2{28d451f77a4de8a52cd2586be6cc1800527fe70ea84e8b3f90098495d088e086} to 3{28d451f77a4de8a52cd2586be6cc1800527fe70ea84e8b3f90098495d088e086}.

– Lean hogs: U.S. pork production is expected to recover, easing lean hog futures and resulting in a forecast for 3{28d451f77a4de8a52cd2586be6cc1800527fe70ea84e8b3f90098495d088e086} growth in production, recovering from outbreaks of PEDv in the past year.

– Corn: Increased crop storage and decreased acres will support prices, which will likely increase slightly in 2015.

– Soybeans: Improved global soybeans supplies resulting from this year's record crop will cause prices to trade in a tighter range than in past years.

– Soymeal: Strong global demand is expected to support the highest soymeal prices in two years.

– Soy oil: Futures prices will likely decrease or level off over the coming year, with a possible upswing later in 2015.

– Wheat: Wheat prices will find a base early in the year, but will likely stabilize.

– Cotton: China will likely slow its import demand by the largest measure since 2008-09, and cotton's ICE (Intercontinental Exchange, Inc.) will remain restrained throughout the coming year.

– Sugar: ICE No. 11 futures prices are likely to increase steadily in 2015, but heavy stocks and depreciation in the Brazilian real should limit gains.

– Palm oil: Strong supplies of soybeans will limit gains in prices next year.

– Coffee: Tighter supplies and declining stocks will likely elevate prices in 2015.

– Cocoa: Cocoa futures will likely remain under pressure in the coming year.



© Copyright 2014 DTN/The Progressive Farmer. All rights reserved.

Posted by Jami Howell

Notify of
Inline Feedbacks
View all comments
Would love your thoughts, please comment.x