12-07-2011 10:50 AM - edited 12-07-2011 10:59 AM
A new report out by Rabobank estimates grain prices will continue to dip into the first of next year, but will remain on the profitable side through the year. Most importantly, they guess the market will return its attention more to fundamentals after spending much of the last half of this year with most of the eyes on outside factors. Here's an excerpt:
"We believe the long-term bull run in agri-commodities remains, but expect prices across the complex to ease from their recent record highs, continuing their downward trajectory in place since mid-2011," according to a Rabobank report from analysts Luke Chandler, Keith Flury, Erin Fitzpatrick and Nick Higgins. "Elevated price levels must persist in order to encourage farmers to continue expanding production to keep pace with demand growth and allowing global inventories to rebuild. Agri-commodity demand should remain robust in 2012 as consumptive growth in emerging-market economies continues to drive the agri-complex."
So, are they right?
12-07-2011 01:46 PM
Interesting. They don't see a major risk to RFS and even if it comes to pass, not a major impact on prices.
Overall, I'd say Rabobank's outlook sugests one hedge heavily NLT 2Q12. BTW, do they use a calendar year or a fiscal year, and if so, what is the span?
12-07-2011 07:12 PM
There is absolutely no way to know if they're right. I'll give them 50/50 - or less.
There are too many variables and supplies, as compared to recent history, are not piling up at any great rae. I have no doubt of an adequate supply of almost any grain this marketing year. On the other hand we could be looking at being very short in a way that would really upset the markets in a year's time. That's not the same as saying they will be.
Fact is, we've had severe jolts to the grain markets in a fairly short number of years. I see paranoia on a level I've never witnessed before. Luckily we've had tools to deal with the crises in outside markets that were not available for the Depression to counter what is arguably greater stupidity now than then.