Agri Commodities Monthly – October 2012

Agri Commodity Markets Research

Agri Commodities Monthly – October 2012

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SELLING LEAVES MARKETS UNDERVALUED
Speculative and harvest selling pressure may cause futures prices across the agri commodity complex to drop beyond what we consider fundamental fair values this month.
GRAINS & OILSEEDS
WHEAT ///
Wheat supplies tighten further as supply concerns increase
Global production estimates have been reduced on poor weather
Black Sea export program is ending as supplies have run out
Key winter wheat areas remain in drought mid-way through planting
CORN ///
Corn fundamentals remain tight but bearish technical indicators delay rally
Speculative selling likely to continue in short term
South American production expected to be record large – but risks remain
US demand rationing is not sufficient to meet near-record tight balance sheet
SOYBEANS ///
Our price forecast is lowered on better supply outlook
Higher US supply on increased area harvested and slightly better yields
Price drop on benign South American weather and speculative selling
Market currently appears oversold
PALM OIL ///
Palm oil Q4 price forecast lowered due to record high stock levels
Higher than expected production pushed stocks to record high levels
Low prices likely to spur higher demand
Supplies to be drawn down in early 2013
SOFTS
SUGAR ///
We maintain our price forecast and expect prices to average below USc 20/lb on increasing supplies
Thai and Brazilian crops still weather dependent but base-case scenarios suggest building surplus
Demand outlook not viewed as constructive with buyers expected to hold off on extending coverage until prices fall further

COFFEE ///
We maintain our view that Arabica will trend upwards towards the USc 170/lb level and Robusta will fall on harvest pressure
Falling NY prices slowed the physical market and less grower selling is supportive
Weather in Vietnam looks supportive for production

COCOA ///
We have reduced our cocoa price forecast but remain positive given fundamental outlook
West African production concerns are reduced
European grindings were 16% lower in Q3 but outlook is positive

COTTON ///
Emerging quality concerns are a short term impact as global fundamentals continue to weaken
US cotton export volumes for the current marketing year on par with the 5-year average although total commitments are lagging
China’s cotton import programme has had the strongest start in eight years supporting international prices

Food and Agribusiness Research & Advisory
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ENDS

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