AGRI/SOFT | Bearishness
Commodity Monthly Prices Oct. 2015
Wheat Rice Soybean Beef
Sheep
172.7 373 742 4.1 4.91
Wheat, rice and soybean oil price in $/tonne
The international wheat market is bearish and projected to remain so in 2016. The supply demand condition is unbalanced
the previous crop. However, demand is estimated at 717 million tonnes by the USDA, implying a surplus. The forecasts have been a drag on wheat prices and projected to exert further pressure. Expectation of larger supplies entering world markets following the removal of export taxes in Argentina weighed on wheat quotations, FAO has said. Rice price has also not looked up
and production has been going up. The situation here is better compared to wheat. According to the USDA, the 2015/16 global production forecast was raised 0.8 million tonnes to 470.1 million tonnes, 2% below a year earlier. Production forecasts were raised for China, the European Union, Mali, the Philippines, and the United States. With consumption projected to exceed production for the third consecutive year, global ending stocks in 2015/16 are projected to decline 14% from a year earlier to 89.7 million tonnes. Global trade in 2016 is projected at 42.1 million tonnes, up 2% from the previous forecast and the second highest on record.
February 2016 |
www.wealth-monitor.com
Export forecasts for 2016 were raised for Pakistan, Thailand, the United States, and Vietnam. Import forecasts for 2016 were raised for Indonesia and the Philippines. Outside the cereal complex, meat
prices fared badly in 2015 to its lowest average since 2010. Notably, 2014 was a year of record price for meat prices. Prices came down in December as well for most categories such as ovine and bovine. According to FAO, reduced import demand in the United States for bovine meat intensified competition in other markets. In contrast to most agri commodities,
oilseeds, especially soybean oil has seen firmness in prices. Soybean oil price surged to six month high in December after touching a ten year low in middle of 2015. However, international palm oil prices remained stable as concerns regarding possible production declines in Southeast Asia were offset by weak global import demand. Another sweetener within the agri
commodity complex was sugar. Sugar has maintained its bullish journey, being driven by projections of a global deficit in 2016. Demand is expected to surpass production by close to 6 million tones, thereby correcting the global surplus that has lasted for nearly five years. International sugar prices continued to be influenced by concerns over harvesting delays in the South-Central producing regions in Brazil, caused by excessive precipitation. Prospects of reduced sugar harvests in other main producing countries, in particular India, Thailand, and South Africa, also provided support,
notes the FAO. There is no relief in prices of pulses, a
commodity of which India is the largest producer, consumer and importer. The crop size is lower from the summer sowing season due to deficit rainfall. Prospects of winter crop, due for harvest in March, is also not encouraging. Prices of most pulses, are up by up to 100% more than the corresponding price of last year.
Oversupply situation in cotton
remains the concern and the bearish price outlook is not likely to change in near months. China continues to sit on large stocks. USDA has slightly lowered the output forecast in 2015-16 due to decline in China, India and Pakistan. The extended decline in crude oil has made synthetic fibre a competitive option vis- a-vis cotton. This will also be a drag on prices. Coffee continues to trade in a low
narrow range in the absence of any strong fundamental that could support prices. USDA has forecast global coffee production for 2015-16 to be up 600,000 bags over the previous year to 150.1 million as record output in Indonesia and Honduras — as well as recovery in Vietnam — more than makes up for a shortfall in Brazil. The sustained bearishness in food
prices has come as a relief to import dependent nations where food inflation has also either been tamed or is moderate.
31
Nov. 2015
176.9 368 726 3.9 4.83
Dec. 2015
173.7 363 761 3.73 4.72
Sources: FAO, USDA, World Bank
Source: IMF, World Bank
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