Soft commodities look a better bet for gains than grains in
2014, with cocoa to hit three-year highs, Commerzbank said, forecasting a
waning performance by livestock futures.
Among the main grains and oilseed contracts, only Chicago
corn will managed headway next year, boosted by the prospect of a drop in US
sowings next year, as weak prices prompt farmers to seek alternative crops.
"Assuming normal weather conditions, the relative
availability of corn will probably decline compared with wheat in 2014-15,
leading to a narrowing of the price difference between corn and wheat," the
"We also expect corn to recover in absolute terms, even if
the high prices of 2011 and 2012 are likely to remain a long way off."
However, soft commodities, which have generally reported
losses this year, will see price rises, especially cocoa, which in London will
rise to £1,850 a tonne by the end of the year.
That would be the highest prices since September 2011, and
is set to be followed by further gains in 2015, reflecting expectations voiced
by the International Cocoa Organization of "structurally driven deficits".
Commerzbank also quoted a caution by Olam International, the
agricultural commodities trader, that prices will "have to rise again strongly,
despite the increases of recent months, in order to sustainably attract
investment to the cocoa sectors of the key cocoa-producing countries".
The bank added: "Given market deficits and the need to
invest in the cocoa sector to keep pace with rising demand in the mid-term, we
believe cocoa prices will continue to rise."
Sugar prices will recover a little too, averaging 19.5 cents
a pound in the last quarter of next year, given that they have already falling
below production costs in many countries, implying a disincentive for output
And arabica coffee futures will recover to end the year at
110 cents a pound, reviving further in 2015 too, although only after hitting
100 cents a pound as an average for the April-to-June quarter.
"As a minimum, the current low price phase will lead to
lower yields in the medium term due to scrimping on fertilizer and crop
protection," the bank said.
The "more diminished outlook" for production from 2015-16 "should
allow prices to rise slowly, so that after an intermittent low during the
Brazilian harvest in 2014 we expect the price of coffee to recover".
But cotton prices are seen falling to 70 cents a pound for
the first time since 2012, pressed by the likelihood that China will revamp its
generous state support regime which has been a big prop to values domestically
And among grains, for wheat, the prospect of a rise in area,
and another strong harvest, will keep pressure on prices, which should average
$6.50 a bushel in Chicago and E190 a tonne in Paris in the last quarter of 2014.
"We are optimistic regarding the supply in 2014, which
should be reflected in falling prices, particularly in the second half of 2014,"
For soybeans, the bank saw a fall to $11.50 a bushel, a
price last seen in January last year, as relatively high current values
"Against the backdrop of expectations of a global surplus in
2013-14 and a positive outlook for the 2014 US harvest, a feeling of scarcity
is unlikely to become established on the soybean market in the foreseeable
The bank forecast livestock finishing next year a little below current levels, at 83 cents a pound for lean hogs and 132 cents a pound for live cattle.