Grain markets are set to remain under pressure during the first half of 2010, according to analyst Rabobank.
Its latest Agri Commodities report forecasts “another lacklustre year of price performance compared to recent seasons”, with aggregate world stock estimates for corn, wheat and soybeans in 2009/10 showing a 3% annual increase, to their highest level since 2001/02.
“Rabobank expects to see further losses in the grain markets during the first half of 2010, with a subdued recovery expected in the second half.”
The scale of recent price declines for both wheat and corn meant a limited downside for markets, and long index funds in the Chicago futures market would provide some support, it said. Although large wheat supplies would cap significant price rallies, the report predicted markets would reach a turning point in the second half of 2010.
“Based on the magnitude of the US Department of Agriculture’s reduction estimate for US winter wheat plantings, to their lowest level since 1913, a moderate tightening in US wheat stocks is expected in the 2010/11 season. However, our yield analysis suggests it would take multiple crop disasters in the 2010/11 growing season to result in a bullish price scenario for the global wheat market.”