Stefan Vogel, Global head of Rabobank (ACMR) said, “Despite large stocks in the G&O complex and currency pressure from a strong US dollar, we still see more upside than downside risks due to likely weather events across commodities.”
2015 was characterised 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 US 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.
For more information please contact the report’s authors:
Stefan Vogel, firstname.lastname@example.org +44 20 7664 9523
Tracey Allen, email@example.com +44 20 7664 9514
Carlos Mera, firstname.lastname@example.org +44 20 7664 9512
For other information, please contact Rabobank press office:
Melanie Giles, Melanie.Giles@Rabobank.com +44 20 7809 3171
Madelon Kaspers, Madelon.Kaspers@rabobank.com +31 (0) 6 1088 7244