Cocoa futures represent the best bet among agricultural commodities
in 2014, lifted by the prospect of a third successive season of production
deficits, and soybeans the worst, set for a decline of 20%, Rabobank said.
The bank said that, next year, agricultural commodity prices
in general "face headwinds as supply rebuilds, pressuring prices", with many markets
to become less volatile too given more "balanced" supply and demand
Next year "is shaping up as a relatively balanced year for
most agri commodities", Rabobank said in a report, adding that "narrower
trading ranges" will be a feature of "some, in not most, markets".
"Global inventory levels have been rebuilding throughout
2013, and the rapid demand growth of recent seasons has slowed," the briefing
said, highlighting the slowdown in growth in the biofuels industry.
'Bullish outlook on
However, cocoa will be protected from the downtrend in
prices by the prospect of a third consecutive year of production deficit in 2014-15,
after shortfalls pegged by the bank this season at 207,000 tonnes, and last
season at 154,000 tonnes.
The report noted a "bullish outlook on cocoa prices throughout
2014 as consumption continues to outstrip production, drawing down on stocks",
which will this season fall below 1.5m tonnes for only the second time in at
least a decade.
Cocoa futures will average $3,050 a tonne in New York in the
last quarter of next year, well above the $2,734 a tonne that December 2014
futures were trading at on Friday.
Cocoa has not traded above $3,000 a tonne in New York since
Run of surpluses to
Prospects for sugar are somewhat bullish too, Rabobank said,
foreseeing a rise in prices to 18.8 cents a pound by the end of next year, as the
prospect of a production deficit in 2014-15, the first in five seasons on
Rabobank estimates, supports values.
"The 204-15 global sugar balance is expected to transition
into a neutral-to-deficit balance, capping ending stocks growth."
With investment in the industry slowing this, thanks to weak
prices, "the rapid expansion of acreage from 2008-09 to 2013-14 will slow",
with the potential for "further deficit seasons ahead".
However, Rabobank was more downbeat on many other
agricultural commodities, and in particular soybean futures, which it saw
tumbling to average $10.70 a bushel in the last quarter of the year.
"Soybean prices are poised for substantial downward
adjustment from current levels.
"After two consecutive years of decline, global soybean
stocks are expected to recover in 2013-14 as a result of the large harvests in
the Americas," reaching 75.1m tonnes at the close of the season - a record, and
higher than the 70.6m tonnes the US Department of Agriculture has factored in.
Chicago soybean futures were trading at $13.17 a bushel on
Friday for January delivery, and at 11.55 ¾ a bushel for the November 2014 contract.
On coffee, the bank was particularly downbeat too,
forecasting a drop in New York arabica futures to 95 cents a pound by the last
quarter of the year, a price not seen since July 2006, given the prospect of a
large Brazilian harvest.
Corn, wheat outlooks
Rabobank was more neutral on the grains, forecasting that corn
prices will "trend slightly lower" to end next year at about $4.10 a bushel,
with farmers' enthusiasm for storing crops, and financial ability to withhold sales,
cushioning the decline under the weight of a record US crop.
"The combination of low interest rates, low commodity prices
and historically strong access to cash will incentivise US farmers to store a
significant portion of the 2013 corn harvest into 2014."
On wheat, Chicago prices were seen steadying around $6.40 a
bushel for most of next year.
While world wheat production next year is expected to fall
by some 14m tonnes to 687m tonnes , consumption will fall too, as the large discount
in corn prices encourages users to switch grains.
"While we not do expected a lot of upside for flat price,
wheat prices are likely to maintain a strong premium over corn during 2014."