Agricultural Commodities Price Outlook Economic Forecast

Agricultural Commodities Price Outlook

Prices to perform erratically this year

Agricultural commodity prices are expected to perform erratically this year, reflecting growing volatility in these markets. The outlook for the end of the year is positive, albeit characterized by considerable differences among raw materials. Prices are projected to increase 5.3% year-on-year in Q4 2017. Q4’s price rise in this complex will be largely driven by higher prices for grains such as corn, oats and wheat. Moreover, coffee prices are projected to rise through all four quarters of the year, but the increase is expected to slow toward the end of the year. Meanwhile, soybean prices are seen facing volatility this year, while cocoa and sugar are expected to be the worst performers.

Fundamentals for key grains such as corn, oat and wheat are expected to remain in place, with stronger global economic activity and demand from China driving up prices for these commodities. In contrast, soybeans are projected to underperform their grain peers given a stronger-than-expected summer crop this year, particularly in Brazil, despite the road blockades in Brazil at the outset of the year and the strike at the Rosario port in Argentina. Soft commodities, such as cocoa and sugar, are expected to be the worst performers among agricultural raw materials. Weakness in cocoa prices persisted in Q1 and analysts project they will continue falling throughout this year, owing to expectations of a return to strong global cocoa production this harvest year. According to the International Cocoa Organization, a structural surplus is likely to last for some time. Meanwhile, sugar increased strongly in Q1, but prices are projected to fall in Q4 as a result of falling ethanol prices in Brazil, higher expected production and exports in Indonesia, and plans to restrict imports in India this year.

On the weather front, the La Niña weather phenomenon was softer than expected this year, which means less expected disruptions for agricultural commodity producers. However, politics is likely to have bigger influence than the weather on the performance of agricultural commodity prices this year. As mentioned in our previous report, while the Argentinian government is improving tax and regulation frameworks, which will have a positive impact on soybean producers and exporters, in Brazil the government continues to struggle to pass legislation at a time when the economy is slowly emerging from a deep and protracted recession. Meanwhile, in the northern hemisphere, the new U.S. administration under Donald Trump remains keen on renegotiating trade deals to favor the economy. High uncertainty persists on this front, but if President Trump goes ahead with his campaign promises, this will have the potential to disrupt global trade flows.

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Agricultural Historical Price Data

2012  2013  2014  2015  2016  
Corn698.6  598.06  397.77  361.72  343.92  
Oats367.32  387.48  402.11  284.65  255.52  
Soybeans1454.53  1419.78  1250.72  936.31  968.21  
Wheat749.42  699.94  578.22  481.76  431.09  
Cocoa2390.93  2441.23  3064.48  3136.98  2893.27  
Coffee175.1  122.21  171.43  132.27  137.88  
Cotton74.43  79.63  73.38  61.47  64.13  
Sugar21.54  17.69  16.99  13.43  18.08  
Wool1088.33  1071.7  1047.33  1198.43  1293.69  

Corn prices in USD cents per bushel (bu).
Oats prices in USD cents per bushel (bu).
Soybeans prices in USD cents per bushel (bu).
Wheat prices in USD cents per bushel (bu).
Cocoa prices in USD per metric ton (mt).
Coffee prices in USD cents per pound (lb).
Cotton prices in USD cents per pound (lb).
Sugar prices in USD cents per pound (lb).
Wool prices in AUD cents per kilogram (kg).
All prices are average of period (aop).

Sample Report

Price forecasts and historical data for Energy, Metals and Agricultural Commodities


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