Rabobank International has released its Agri Commodity Markets Research, Outlook 2012 – Down, But Not Out. Rabobank Global Head Luke Chandler presented some of the highlights of the report.
"As the title suggests, we see prices lower in 2012, but we're not expecting a collapse in prices," Chandler said. "So overall we're not expecting a return to the record highs that we saw during the 2011 season, but we are still expecting prices to remain at very elevated levels."
According to the report, soybeans are the most bullish commodity for 2012, with corn coming in below them. The bearish end of the spectrum includes sugar, cotton and coffee.
Chandler says that due to the uncertainly globally, they have included a base-case scenario, which factors in a slowdown in global economic growth, most in the developed markets but in emerging markets they don't see a strong slowdown in demand.
"We're also forecasting a slightly weaker U.S. dollar in 2012," Chandler said. "They are the keys to the factors that we've included in the base-case forecasts and then we have a high and low forecast on each of the commodities that we're covering. In the high case we're assuming better than expected macroeconomic conditions, a quick resolution to the EU debt crisis and the wheels of the global economy start turning a lot faster than what people are currently forecasting. In the low case scenarios we see a wider and deeper slowdown in the global economy, really impacting emerging market demand, which obviously would have significant ramifications to the agricultural complex."
A slowdown is expected in the global economy most felt in the United States and the Euro-zone where weaker economic growth will be seen. However Rabobank says emerging market demand should remain strong and robust in 2012.
"That's going to underpin what we see as very supportive fundamentals," Chandler said. "Not as bullish as what we saw over the past 12 months but still very supportive of elevated prices on a historical basis."
To view the complete report, Outlook 2012 – Down, But Not Out click HERE.To hear Chandler's overview of Rabobank's findings use the audio player on this page.