ABN Amro expects wheat and maize prices to rise in 2019, while soybean prices are expected to be under pressure. The bank also expects currency developments and the trade war to continue to have a strong impact.
The mood in the soybean market is more positive, mainly because China has been importing soybeans from the United States (US). It is the main reason for the rising price. It remains to be seen to what extent imports from China will actually pick up. In any case, the situation has the market in its grip.
However, fundamental factors also remain important. This includes the large harvests in Brazil and the US. According to the International Grains Council (IGC), global supplies will increase by 2019% in 8. Demand also increased by 3,5%, mainly due to more animal consumption. However, this is not enough to prevent oversupply. That is why ABN Amro expects more pressure on the soybean price.
Corn prices are rising
Corn prices are up 2019% so far in 2, mainly due to good demand. Since the price is relatively low, demand remains good; especially the demand from the animal feed industry China, Ukraine and the US will grow strongly. Demand from the ethanol industry also remains good. U.S. ethanol exports are up 2018% year-over-year through October 30.
The IGC also expects that global corn production will increase by 2018% in the 2019/2,5 season compared to the previous season. Demand is expected to increase by 3,7%. This will most likely bring global corn supplies to their lowest level in 5 years. ABN Amro also expects a higher corn price in 2019.
Influence of Brazilian real
The Brazilian real also plays a major role in the soybean and corn market. As the currency has strengthened, soybeans (and other raw materials) have become less valuable to Brazilian traders. This causes them to wait and see before selling, hoping for higher prices.
Wheat prices also rose in the first few weeks of 2019, mainly as demand remained strong. After 5 years of oversupply, the wheat market will face a shortage this season. Production is declining in Europe, India and Russia, among others, while it is increasing in China and the US.
Wheat price is rising
ABN Amro also states that they expect the dollar to become weaker (relative to the euro) towards the end of 2019. This improves the competitiveness of American wheat. In combination with the decline in production and unchanged demand, the price of wheat will rise further, the bank expects.
Finally, the sugar price also showed an increase at the beginning of the year. The reasons for this include the higher oil price, concerns about weather conditions in Brazil and India and the stronger Brazilian real. Since January 1, the sugar price has risen by 10%.