 "Agri commodities face bearish outlook")
The bears seem to have gripped agri commodities globally. While improved weather conditions in the US and good monsoon in India have improved the crop prospects, weak global economic conditions have affected demand, putting pressure on prices.
Agri commodities, including cotton, soybean, wheat, sugar and palm oil, are among the major commodities facing a bearish outlook as demand remains subdued with robust crop prospects.
“We maintain a bearish view on most agri commodity prices this month, with further downside expected for the grains and oilseeds markets from current levels as new crop supply becomes more certain,” Rabobank stated in its July report.
“International prices may remain under pressure and hover around 85-85 cents a pound for some time. But India may face a sharp increase in cotton prices as more-than-expected cotton exports have taken place so far and we may be left with lesser cotton than estimates,” said a leading cotton exporter from Ahmedabad.
ICE New York Cotton hit $1.80 per pound in the second quarter of 2011. The prices have fallen to sub-80 cents in the second quarter of 2012. However, a sharp recovery from this level appears less likely as estimates suggest prices to hover around 80-83 cents for the remaining part of the year. In India, cotton prices hover around Rs 44,000 per candy (356 kg).
Good monsoon in India has boosted cotton sowing in key growing regions. This is likely to boost production, thereby further increase in supplies through the end of this year.
Rabobank further maintained that the wheat price outlook also remained weak as Northern Hemisphere supply recovery trumped unexpected Chinese wheat demand.
Significant year-on-year production increases in the Black Sea region, Europe and Canada will help lift world wheat production by 41 million tonnes (mt), or six per cent in 2013-14. Large increase in exportable wheat surpluses in the Black Sea region, particularly in Russia and Ukraine, are forecast to result in very aggressive pricing, which is likely to dominate world wheat trade over the coming months.
“We expect the trajectory for global wheat prices to remain sideways to lower over coming months. Beyond the Northern Hemisphere summer, we expect multi-year lows to be formed,” the report stated.
Even as India’s palm oil imports are likely to rise by 800,000 tonnes against last year, palm oil demand in other importing nations to remain subdued, causing prices to remain under pressure. “India’s total palm oil imports likely to remain around 11 mt against 10.2 mt last year,” said B V Mehta of Solvent Extractors’ Association of India.
Palm oil prices have fallen from highs of around 3,600 Malaysian ringgit (MYR), or Rs 67,635, per tonne in the second quarter of 2011 to around MYR 3,000 per tonne in second quarter of 2012. However, prices fell sharply after that and touched the lower levels of around MYR 2300 per tonne in the last quarter of 2012. However experts noted that weakening of the Indian rupee against the dollar adversely affected palm oil imports. Hence, in spite of international prices being lower, palm imports turned costlier for India.
The Rabobank report also commented on that corn prices would remain bearish as production uncertainty prevails. The Chicago Board of Trade corn prices have jumped from $6 per bushel in first quarter of 2012 to around $ 7.5 by the third quarter. However, the prices started declining and inched closer to $6 by the end of first quarter of 2013.
Agri commodities, including cotton, soybean, wheat, sugar and palm oil, are among the major commodities facing a bearish outlook as demand remains subdued with robust crop prospects.
“We maintain a bearish view on most agri commodity prices this month, with further downside expected for the grains and oilseeds markets from current levels as new crop supply becomes more certain,” Rabobank stated in its July report.
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According to the report, the global stock of cotton is likely to close the 2012-13 marketing year above the current estimates of a record 85.75 million bales as US exporters are unlikely to reach the current target of 13.3 million bales.
“International prices may remain under pressure and hover around 85-85 cents a pound for some time. But India may face a sharp increase in cotton prices as more-than-expected cotton exports have taken place so far and we may be left with lesser cotton than estimates,” said a leading cotton exporter from Ahmedabad.
ICE New York Cotton hit $1.80 per pound in the second quarter of 2011. The prices have fallen to sub-80 cents in the second quarter of 2012. However, a sharp recovery from this level appears less likely as estimates suggest prices to hover around 80-83 cents for the remaining part of the year. In India, cotton prices hover around Rs 44,000 per candy (356 kg).
Good monsoon in India has boosted cotton sowing in key growing regions. This is likely to boost production, thereby further increase in supplies through the end of this year.
Rabobank further maintained that the wheat price outlook also remained weak as Northern Hemisphere supply recovery trumped unexpected Chinese wheat demand.
Significant year-on-year production increases in the Black Sea region, Europe and Canada will help lift world wheat production by 41 million tonnes (mt), or six per cent in 2013-14. Large increase in exportable wheat surpluses in the Black Sea region, particularly in Russia and Ukraine, are forecast to result in very aggressive pricing, which is likely to dominate world wheat trade over the coming months.
“We expect the trajectory for global wheat prices to remain sideways to lower over coming months. Beyond the Northern Hemisphere summer, we expect multi-year lows to be formed,” the report stated.
Even as India’s palm oil imports are likely to rise by 800,000 tonnes against last year, palm oil demand in other importing nations to remain subdued, causing prices to remain under pressure. “India’s total palm oil imports likely to remain around 11 mt against 10.2 mt last year,” said B V Mehta of Solvent Extractors’ Association of India.
Palm oil prices have fallen from highs of around 3,600 Malaysian ringgit (MYR), or Rs 67,635, per tonne in the second quarter of 2011 to around MYR 3,000 per tonne in second quarter of 2012. However, prices fell sharply after that and touched the lower levels of around MYR 2300 per tonne in the last quarter of 2012. However experts noted that weakening of the Indian rupee against the dollar adversely affected palm oil imports. Hence, in spite of international prices being lower, palm imports turned costlier for India.
The Rabobank report also commented on that corn prices would remain bearish as production uncertainty prevails. The Chicago Board of Trade corn prices have jumped from $6 per bushel in first quarter of 2012 to around $ 7.5 by the third quarter. However, the prices started declining and inched closer to $6 by the end of first quarter of 2013.