While many stock prices are still sprinting at the end of 2021, it is also far from calm on the commodities markets at the moment. The markets are thus closing the year in style. What are the expectations for early 2022? We list a number of capricious raw materials.
What are the expectations for early 2022? The impact of corona will undoubtedly remain noticeable, just like the weather conditions. We list a number of unpredictable raw materials.
Oil price bobs up and down
Oil is the number one priority to follow. Although oil is not an agricultural commodity, it is used for a reason the mother of all commodities named. The 'black gold' does have a catalyst function for the overall sentiment. After all, many raw materials correlate - to a greater or lesser extent - with oil. The oil price is hovering just below $80 per barrel in the latter part of the year. The fear that the omikron variant of the coronavirus will affect demand for oil has now faded into the background. It remains to be seen which way things will go in 2022. Analysts at investment bank Goldman Sachs think that the price can rise towards $100, but not everyone in the market agrees with this. OPEC will meet again at the beginning of January. There doesn't seem to be much interest, except from the US, to increase production. In the background, the coronavirus - and the government measures associated with it - continue to determine the direction.
Doubts in wheat market
The wheat market is searching at the end of 2021. After records above €300 per tonne were set in November, prices in Paris and Chicago also fell considerably. The wheat market continues to monitor the weather forecast worldwide to find direction in wheat production this and next season. A changing rate is therefore likely. If we look at the physical market in the Netherlands, we see that wheat prices have stabilized around €280 per tonne. Looking at the stocks and expected ending stock, grains remain scarce and the ending stock is extremely tight. A good harvest in 2022 should make up for this. If that does not happen, the current sentiment will continue for another season and prices will remain sky-high. Favorable for arable farmers, certainly not for livestock farmers.
Dairy market still searching
It is still difficult to say which direction the dairy market will take in 2022. Dairy prices rose unexpectedly in the generally strong fourth quarter, fueled by sharply lower milk supplies in important production regions. Now the first quarter awaits, where the market usually cannot make a fist. The seasonal milk supply is currently increasing again, and there are signs that Chinese dairy imports are slowing down. At the same time, stocks of cheese, butter and milk powder are low. Given this cocktail of factors, the high prices seem to be able to hold up for the time being, although this does cause friction in the chain. Recently, the large German supermarket chain Edeka boycotted Bel and Lactalis products because they did not want to accept the high prices. The higher European milk powder prices are also being reluctantly accepted in the Middle East and Asia, exporters indicate. The market is no longer so easily impressed by corona measures and can take a beating.
Soy prices are quietly rising
The soy price has been overshadowed in recent months by the price records on the wheat market. Since mid-November, however, the price in Chicago has risen almost 20% to around $500 per tonne, the highest level since last August. The revival is due to drought in South America. The market assumes that this will limit the record high harvest estimates. The soy harvest in South America starts in January and ends in March. In the final phase of the growing season in the Southern Hemisphere, the market will likely be volatile: precipitation depresses and drought drives up prices. On the demand side, Chinese import needs are decisive, but this appears to be difficult to estimate.
Will high sugar prices last?
The question on the sugar market is whether the high prices can be sustained. The sugar quotation on the Liffe in London rose by 20% this year and in mid-November even reached the highest level in more than four years of €463 per tonne. The strong price formation is mainly motivated by the expected shortage in sugar stocks. The international sugar organization expects a decline of 4% to 93 million tons this season. On the one hand, consumption is growing, on the other hand, production is declining in sugar exporting countries such as Brazil. The sugar market remains volatile – partly due to corona. Whether the high sugar price will hold depends partly on oil. Due to high fuel prices, sugar cane is in demand for the production of ethanol.
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