Rabobank releases 2015 outlook on ag commodities

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  Rabobank’s recent global outlook for ag commodities including corn and soybeans in 2015 focuses on demand, supply and prices.

  From WATTAgNet:
  Rabobank’s recent global outlook for ag commodities including corn and soybeans in 2015 focuses on demand, supply and prices.
  Rabobank says lower price levels should encourage consumption growth. The report says key variables include U.S. dollar strength, uncertain Chinese demand growth, slowing biofuel demand, and oil price weakness.
  “2015 will be another interesting year for agri commodities,” said Stefan Vogel, global head of Rabobank Agri Commodities Markets Research. “Macro drivers remain very much in play and price swings from supply and demand shocks are still likely, given that the stocks for most commodities are not yet at levels necessary to provide an adequate buffer.”
  Rabobank says farmer selling and planting decisions, global demand and weather-related production risks will remain key drivers through 2015. If growing conditions are normal, the report says moderate increases in demand will allow stocks to build for most commodities through 2015.
  The report also says projected lower prices through 2015 can provide a great incentive for consumption to exceed the forecast levels, particularly in China.
  On the supply side, weather-related production abnormalities are expected to affect commodity prices. Weather threats in 2015, including El Nino, could cause prices to diverge from Rabobank’s base case.

Uncertainty in commodity markets developing along with El Niño

As researchers keep an eye on a large pool of unusually warm water in the Pacific Ocean, the prospects seem high for an El Niño weather pattern returning. And if El Niño returns, commodity markets will be significantly disrupted, according to private agribusiness consultant Ken Shwedel.
Occurring every three to seven years, El Niño is a buildup of unusually warm surface waters in the central and eastern equatorial Pacific Ocean that leads to global changes in temperature, wind patterns and precipitation. That has the potential of playing havoc with world agricultural production.
According to Shwedel, El Niño tends to cause drought-like effects in Australia, impacting the Australian and world beef markets. In other parts of the world, such as Peru, it tends to create flooding, which will have a harsh effect on feed crops. Shwedel also indicated there are prospects of increased precipitation in the United States. All of those factors are expected to subsequently impact world feed, pig and poultry markets.
El Niño projections differ among agencies, as the U.S. National Oceanic and Atmospheric Administration (NOAA) has said there is a 50 percent chance of an El Niño phenomenon in 2014, while the Australian Bureau of Meteorology is calling for the chances to be more than 70 percent.

Industrias Bachoco profits down 93 percent in 2011

Industrias Bachoco made 127.8 million pesos (US$10.06 million) in net profit in 2011, down 93.6 percent from 2010's 2.005 billion pesos (US$157.85 million), according to the company's latest financial report. Industrias Bachoco experienced large increases in production costs, driven by global increases in prices of corn, soybean meal and other components of production, according to the company. This, combined with challenging economic conditions and high depreciation of the Mexican peso at the end of 2011, led the company to post negative profit for the fourth quarter (-57.9 million pesos [US$4.56 million]) and weak results for 2011. "We were not able to fully transfer increases in our poultry production costs to our customers, mainly due to a strong supply of chicken coupled with weak demand for chicken during most of the year, and a 13 percent depreciation of the peso in 2011, resulting in a 2.9 percent negative operating margin for the quarter and 0.2 percent negative operating margin for 2011," said Rodolfo Ramos, CEO of Industrias Bachoco. "Nonetheless, we were able to reach a positive EBITDA (earnings before interest, taxes, depreciation and amortization) result for the quarter and for the year, as well as posting a net profit in year 2011. We ended the year with a positive outlook for the company, with positive results in both our Mexican and U.S. operations registered in December." 

CME Group executive: we will not cover all MF Global losses

Bryan Durkin, chief operating officer for CME Group, told attendees at a meeting of the National Grain and Feed Association Monday in Chicago that the CME Group will cover a substantial amount of the missing funds from MF Global, but stopped short of saying that all monies lost would be covered by the brokerage.
Durkin indicated that he had personally been proactive in reaching out to the agribusiness community in general and to the NGFA in specific after news of the bankruptcy became public.
“This has been an industry-wide blow to the heart of commodities markets – to its producers, to its processors, and to its distributors, and that blow was dealt by the violations that were committed by MF Global,” Durkin said, speaking to a packed ballroom at NGFA’s annual Country Elevator Conference.

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Ag commodity prices increasing, 'modest' food price increases likely

An increase in agricultural commodity prices has fostered worries about an accompanying increase in food costs, but economists with the Texas AgriLife Extension Service said any overall jump will be "modest."
The U.S. Department of Agriculture has forecast that the consumer-price index for food will rise between 0.5% and 1.5% this year and between 2% and 3% for 2011. “Farm commodity prices fell sharply in 2009 and 2010 after reaching record levels in 2008,” said Jose G. Pena, AgriLife Extension economist-management. “However, food prices continued to rise in 2009 and 2010 even as farm commodity prices returned to 2007 levels.” Factors such as adverse weather, a weaker U.S. dollar, increased exports, higher crude-oil prices and heavy commodity contract buying have all contributed to increasing commodity prices.
“Still, on average, a 50% increase in the price received by the farmer results in only a 10% increase in the retail cost of food,” said Pena. “The recent upward movement in commodities pricing is expected to have little immediate effect on the prices of basic food items.”

China commodity prices up across the board

China's major meat and feed commodity prices were up across the board for August from a month earlier, according to the Ministry of Agriculture.
Pork prices have been rising for two straight months, up 10% in August from July at 19.30 yuan per kilogram. Egg prices came in at an 8.4% increase from a month earlier to 8.66 yuan per kilogram, while dressed chicken rose 4% to 14.73 yuan. Beef and mutton showed small growth, 0.8%, to 33.55 and 34.61 yuan per kilogram, respectively.
Average corn prices in August rose 0.5% from the previous month and 17.9% year-on-year to 2.11 yuan per kilogram, while soybean meal prices grew 3.9% to 3.45 yuan per kilogram.