In February 2014, Rabobank experts, exports of a reputable investment bank, lowered its forecast for world wheat prices in 2014. This was due to a significant increase of world’s crop stocks, which is expected by experts of the Bank. In the meantime Bank has increased price forecast for soybeans.
In particular, the forecasted price for a ton of winter wheat on the trading floor in Chicago, according to experts of the Bank, in the fourth quarter of this year will be 215.31/t , which is $29.39/t less than Bank’s previous estimate. If the forecast is correct, price of wheat will fall to four-year low. Price assessment in the first quarter of the year has been reduced by $20.20/t to $216.78/t.
Over the past few weeks quotes for American wheat tend to some strengthening, caused by the unfavorable agrometeorological conditions in the Great Plains of the United States, inspiring fear for the fate of the coming harvest; while other world leading agricultural regions of crop prospects are much more optimistic which leads to some considerable pressure on wheat prices in the world. In particular, rich harvest of wheat is expected in the countries of European Union, as well as countries in the Black Sea region. In total, at the end of the season it will lead to an increase in world wheat ending stocks to at least 20 million tons, which will put world prices of wheat under considerable pressure. As soon as the winter wheat harvesting season in the countries of Northern hemisphere approaches, the pressure will be more and more visible on the world commodity markets.
Note, however, that this forecast of Rabobank contrasts markedly with theses of USDA experts, who came to a conclusion last week that overall decrease in world production of wheat and increase of its consumption will not lead to increase of world crop stocks during 2014/15 MY. In particular, although experts of USDA and Rabobank share the optimistic forecasts about prospects for winter crops in several countries of the Northern hemisphere, except for the United States, in relation to the wheat harvest in Russia they are much more skeptical and believe that unfavorable agro technical conditions observed during fall 2013 while sowing campaign in some regions of the country, largely undermine the prospects of the coming harvest.
Its price forecast for soybeans experts of Rabobank revised in an upward manner. Although they still expect lower prices for oilseeds, however, the degree of this reduction is likely to be much smaller than previously expected- only to $426.23/t by the fourth quarter of 2014, 33.06/t higher than the previous estimate made by Bank experts. Price scores, during the first quarter, increased by $9.18/t to 368.48/t. This is due, in particular, to intense demand for U.S. soybeans of old harvest from importers from China. Although Latin American crops, harvest of which is already underway, should probably provide quotes on oilseed to move noticeably in a downward stream; however, new logistics crisis currently expected in Brazil will limit their potential to decrease. In addition, Argentina is supporting world prices for soybeans and export of oilseed, pent by farmers due to devaluation of the Argentine peso- so far only 6.4% of new oilseed harvest has been sold, against 14% on the same date in the preceding season.