Rabobank deepened expectations for the drop in soybean
prices ahead, despite a relatively downbeat forecast for US production, but
remained upbeat on prospects for palm oil futures.
The bank cut by $0.50 a bushel to $11.50 a bushel its
forecast for average Chicago soybean futures prices in the October-to-December
quarter, and by $0.95 a bushel to $11.25 a bushel its estimate for the average
value in the first three months of 2015.
That foresees a far bigger fall from current levels, close
to $15 a bushel, than investors are factoring in.
Chicago soybean futures for November were trading at $12.23 ½
a bushel in early deals on Monday, down 0.8% on the day, with the March 2015
contract at $12.33 a bushel, down 0.9%.
The bank was in fact more downbeat than many other commentators
on the prospect for a jump in US soybean output this year, forecasting a
harvest of a record 3.48bn bushels.
The US Department of Agriculture forecasts output 160m
bushels higher, based on a forecast of sowings, at 81.5m acres, and yield, at
45.2 bushels per acre, setting all-time highs too.
Rabobank said: "While record planted acres, yield and
production are possible, it is unlikely," with improved spring sowing
conditions likely to see more ground going to corn, for which the sowings
window closes earlier than for the oilseed.
Plantings were more likely to come in at 80.5m-81.0m acres,
the bank said, adding that even this expansion in area, of at least 4.0m acres,
would "push soybean production into areas where yields are historically less",
curtailing the national average to 43.8 bushels per acre.
Even so, the rise in production was enough to support a "bearish
view" on prices, especially with exports from South America accelerating.
"Global fundamentals continue to loosen as record volumes
were exported out of South America by May.
Exports from Argentina, Brazil and Paraguay in the February-to-May
period were, at 32m tonnes, 27% higher year on year.
"Brazil in particular exported 6m tonnes more year on year."
However, elsewhere in the oilseeds complex, Rabobank
remained more optimistic than investors on prospects for palm oil prices,
seeing them recover to 2,700 ringgit a tonne in Kuala Lumpur in the last
quarter of 2014.
The benchmark August contract closed on Monday down 0.3% at
2,416 ringgit a tonne, the weakest finish in seven months, if representing a
significant recovery from an intraday low of 2,386 ringgit a tonne.
The November contract closed at 2,420 ringgit a tonne.
Growth in the discount of palm oil to rival oilseed soyoil
would "encourage substitution of demand over coming months… especially with the
Ramadan festival approaching", Rabobank said.
Furthermore, "weather risks persist", with a potential for
early 2014 dryness yet to curtail output later this year, by when an El Nino
may have kicked in too, further threating output, with the weather pattern
linked to dryness in major South East Asian palm production areas.
Separately, Indonesian palm oil producer Anglo-Eastern
Plantations forecast that prices of the vegetable oil "will remain generally
stable due to the increase in demand from biodiesel and modest levels of
Rabobank, noting "good crop conditions globally and improved
moisture in the US", also trimmed expectations for Chicago wheat futures in the
July-to-September quarter by $0.20-a bushel to $6.20 a bushel.
However, the forecast for prices in the October-to-December
period was raised by $0.40 a bushel to $6.00 a bushel, reflecting the potential
for the El Nino hitting Australian output too.