Rabobank sounded a contrarian note on this year's US soybean
sowings, forecasting a relatively small rise, as it unveiled bearish forecasts
for prices of many agricultural commodities, bar soymeal and sugar.
The bank forecast that US soybean sowings will hit 78.5m
acres this year, beating the 2009 record by some 1m tonnes, but a forecast far
lower than that of other commentators.
Indeed, the US Department of Agriculture forecast of 79.5m
acres is viewed by many commentators as too low, given the incentive to sow the
oilseed offered by relative prices, with November soybean futures trading at
about 2.4 times the price of December corn, an unusually high level.
Earlier this week, broker Doane Advisory Services pegged US
soybean sowings this year at 83.6m acres, while Allendale last week estimated
area at 83.2m acres, foreseeing setbacks to corn seedings from cold, as well as
'Prices will move'
Rabobank, noting that its forecast was "lower than other
private estimates", said that its figure reflected a view "that prices will
move in order to restore some balance in the US soybean/corn market.
Selected Rabobank grain price forecasts, change on previous and (gap from futures curve)
Corn, Q4 2014: $4.20 a bushel, +$0.10 a bushel, (-13%)
Soybeans, Q4 2014: $11.60 a bushel, unchanged, (-2%)
Soymeal, Q3 2014: $475 a short ton, unchanged, (+28%)
Wheat, Q4 2014: $5.60 a bushel, unchanged, (-22%)
Prices for quarter average Chicago spot contract
"Already in March we have seen the new crop soybean-corn
ratio come down," although the bank acknowledged that it was still "historically
high", if below levels approaching 2.6 late last year.
The bank trimmed by $0.20 a bushel to $12.40 a bushel its
forecast for average Chicago soybean prices, on a spot contract basis, in the April-to-June
quarter, citing Chinese cancellations of import orders, and a Brazilian crop
which, while lower than initially expected, is still seen setting a record.
By contrast, the forecast for corn prices in the forthcoming
quarter was raised by by $0.20 a bushel to $4.60 a bushel, thanks to strong US
exports, although this remains below the futures curve, with Rabobank
highlighting signs of increased selling of last year's record harvest.
The bank pegged US corn sowings this year at 93m acres, above
the USDA's figure of 92.0m acres, Allendale's 92.3m acres and the 90.0m acres
expected by Doane.
The bank was also downbeat on prospects for wheat prices, despite
small upgrades to its estimates, foreseeing them fall below $6 a bushel in the
next quarter in Chicago - well below the $7.00 a bushel that July futures were
pricing in on Friday.
Selected Rabobank softs price forecasts, change on previous and (gap from futures curve)
Coffee, Q4 2014: 145 cents a pound, unchanged, (-18%)
Cotton, Q4 2014: 70 cents a pound, unchanged, (-12%)
Raw sugar, Q4 2014: 18.8 cents a pound, unchanged, (+3%)
Prices for quarter average ICE spot contract
Support to prices from worries over dryness in the southern
US Plains, a major winter wheat producing area, "is expected to weaken on
burgeoning global supply come the northern hemisphere summer", Rabobank said.
"Favourable crop conditions throughout the Black Sea region
and the European Union continue to support our view of modest gains to the stocks
of major wheat exporters for the 2014-15 season."
Strategie Grains on Thursday lifted by 200,000 tonnes to
137.7m tonnes its forecast for the EU soft wheat harvest this year, although
some commentators have flagged concerns over dryness in central Europe, as well
However, the bank, stuck by estimates for sugar prices in
the second half of 2014 which are above the futures curve, citing the boost to
values from drought in Brazil's Centre South, responsible for some 90% of output
in the top producing and exporting country.
Indeed, Rabobank cut by 25m tonnes to 570m tonnes its
forecast for the cane harvest in the Centre South in 2014-15, among the lowest
estimates so far for the season, which starts next month, and in line with an
estimate from co-operative giant Copersucar.
The bank slashed to 700,000 tonnes, from 2.1m tonnes, its
forecast for the world sugar surplus in 2013-14, on an October-to-September
It also lowered expectations for the 2013-14 Indian cane
crop by 500,000 tonnes to 24m tonnes, while forecasting the next Australian
harvest at 32.8m tones, constrained by "hot and dry conditions" in the sugar
Separately, Canegrowers is believed to have cut its forecast
for the next cane harvest by 2m tonnes to 32m tonnes, although Agrimoney.com has
been unable to gain confirmation of this downgrade.
'Not available at any
Rabobank was also upbeat on prices of soymeal, seeing them
average $475 a short ton in Chicago in the July-to-September quarter, $100 a
short ton above the futures curve.
"US soymeal supplies are going to get extremely tight until new
crop soybeans become available for crushing during the middle of the fourth quarter.
"Supplies of US soymeal will be extremely low from early
June-July. It will be important for end users to secure physical needs for
summer and early fall.
"It is possible that price may be irrelevant – soymeal may
not be available at any price."