Rabobank Agri Commodities Monthly - February 2012

BEANS BRIGHTEST

We are most bullish on soybeans this month as South American weather risks remain. Further production downgrades are likely to continue supporting prices as Northern hemisphere farmers finalize their planting decisions.

GRAINS & OILSEEDS
WHEAT

Our Q1 price forecast is unchanged with bearish fundamentals to weigh on prices from mid-2012

Wheat remains relatively abundant around the globe, limiting our upside expectations

Spring wheat prospective plantings look set to beat USDA baseline expectations

Without a significant crop failure, our bias remains for easing prices across the 12-month horizon
CORN

We leave our nearby price forecast unchanged as USDA acreage announcements pose short term downside risk, but tight US inventories should prove bullish in Q2 2012

Further recognition of losses to the South American crop will support old crop prices

New crop planting expectations will be moderated by strengthening soybean prices
SOYBEANS

We raise our nearby price forecast again this month as our South America harvest expectations erode on poor weather

Ongoing hot, dry weather in Paraguay and Brazil prompts us to cut more than 2 million additional tonnes from supplies this month

Chinese demand and speculative buying skew price risk to the upside from current levels
PALM OIL

Our price forecast is raised this month along with soybean prices due to smaller global supplies of veg oils

We believe the implications of a smaller global soybean crop have not yet been fully priced into the oilseed complex

Prices are likely to continue to be supported as production falls to its seasonal low in February and alternative veg oil supplies diminish
SOFTS
SUGAR

The sugar market is focused on the Brazilian outlook for 2012 and we expect prices to fall as crop expectations are solidified

A risk premium remains in the market due to supply uncertainly but we maintain our expectations of a global surplus given current conditions

Trade selling is building and as index fund buying wanes and more supply arrives prices will come under pressure
COFFEE

We maintain our view that improving supplies in the coffee markets will result in downside movement

The Arabica market has slowly eased on an increase in origin selling as Brazilians clear warehouses ahead of the new crop

The Robusta market is poised for a correction lower after a short covering rally in London pushed prices higher despite bearish fundamentals
COCOA

We see further upside for cocoa but increasing African crops and the Ivory Coast forward selling remain risks

Due to strong demand and concerns about output due to low prices we maintain our view of higher upside bias for prices

Strong arrivals from Western Africa and better weather conditions there are weighing on the cocoa markets.
COTTON

Cotton buying has waned and stocks expectations are increasing as the 2012 plantings outlook suggests more surplus

We continue to see price downside given the current supply of cotton and the modest forecast off take in the next two quarters

Our 2012/13 crop projections suggest another surplus year assuming average weather conditions

--

Food and Agribusiness Research & Advisory

www.rabotransact.com

Click Here for Full Report

ENDS

© Scoop Media