Agricultural Agricultural Commodities Prices February 2018

Agricultural Commodities Price Outlook

Agricultural: Agricultural Commodities Price Outlook

February 14, 2018

Tighter markets send prices higher in January

Despite ample supply due to no major weather disruptions last year, agriculture prices are gradually recovering following years of abundant production that put a cap on prices. Strong demand for agriculture products is driving the recovery as biofuel consumption remains strong, and there is a general increase in demand for food supplies and animal feed. Agriculture prices rose 1.6% on a month-on-month basis in January (December: -0.9% mom). Eight out of the nine agriculture commodities tracked by FocusEconomics recorded price gains in January, with the largest increases in the prices of cotton and oats. Conversely, prices for sugar declined in the month due to stronger-than-expected output in India and potential changes to ethanol policy in Brazil. The Brazilian government is considering lifting the import tariff on ethanol.

Agriculture prices will be supported this year by increased demand for food, feed and industrial usages. Our panel of analysts forecast a 11.5% annual increase in Q4 2018, more than reversing the 0.9% decline in Q4 2017. Next year, agriculture prices are seen expanding 3.7% year-on-year in Q4 2019.

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