Rabobank Agri Commodity Market Research: Outlook 2016

"Bear with Grains, While Softs Lift Off"

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Nov 27, 2015, 11:17 ET

Rabobank's 12 month outlook for prices from current levels

NEW YORK, Nov. 27, 2015 /PRNewswire/ -- While weather problems paint a bright price outlook for coffee and sugar, grains and oilseeds are likely to be more stable prospects. Record production of grains and oilseeds from South America coupled with decent crops elsewhere materialized in very high global stock levels, which weigh on prices and limit volatility. The dollar strength, which we expect to continue through 2016, will generate stock building of grains and oilseeds in the U.S., while currency weakness in emerging countries like Brazil, Ukraine and Russia, will see very aggressive commodity export offerings from these countries.

Stefan Vogel, Global head of Rabobank (ACMR) said, "Despite large stocks in the G&O complex and currency pressure from a strong U.S. dollar, we still see more upside than downside risks due to likely weather events across commodities."

2015 was characterized by ongoing currency depreciation in Brazil, Ukraine and Russia. The agricultural sectors in these countries are reaping the benefits of lower currency, clawing market share from the U.S. and Europe. Producers in these countries can also profit from potential price swings caused by supply shocks and FX swings that provide opportunities for hedging.

From the consumer side, processors can benefit from rather attractive prices in USD terms and also fairly flat future curves in grains, oilseeds and sugar.

The weather will potentially be a key driver in commodity markets. We currently see El Niño, one of the strongest on record, affecting sugar, cocoa, palm oil and Robusta coffee crops. El Niño is expected to gradually weaken in Q1 2016 but its effects will continue to affect commodity prices. The winter weather in Russia, Ukraine and the US will also be a key driver for grains and oilseeds, even in the absence of a direct El Niño link.

All in all, we expect grains to continue to trade around current levels, as weather related risks are counterbalanced by currency weakness, in many key producing countries, whereas we expect some upside on coffee, sugar and cotton.
Rabobank's 12 month outlook for prices from current levels:

The full report is available to media upon request.

Rabobank Group is a global financial services leader providing wholesale and retail banking, leasing, real estate services, and renewable energy project financing. Founded over a century ago, Rabobank is one of the largest banks in the world, with nearly $1 trillion in assets and operations in more than 40 countries. In North America, Rabobank is a premier bank to the food, beverage and agribusiness industry. Rabobank's Food & Agribusiness Research and Advisory team is comprised of more than 80 analysts around the world who provide expert analysis, insight and counsel to Rabobank clients about trends, issues and developments in all sectors of agriculture. www.rabobank.com/f&a

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