AFRICAN swine fever and erratic weather have heavily impacted agricultural commodities in 2019 and will remain key to prices in 2020, according to Rabobank’s global Agri Commodities Research Outlook 2020.

Rabobank predicts a potential continuation or escalation in the US-China trade war, further increases in productivity on the back of more benign global weather, and the ongoing impact of African swine fever (ASF) will mean farmers globally will continue to operate amid uncertainty in 2020 after years of relatively low prices.

The prices of grains and oilseeds next year will be driven by geopolitics, particularly trade wars, while coffee and sugar prices are likely to recover from decade lows.

Key highlights of the report include:

• Increased global production and forecast record ending stocks in 2019/20 and 2020/21 set the scene for limited upside in global wheat markets over the next 12 months. CBOT wheat is expected to trade between US511- 520 cents/bushel during 2020.
• Soybeans will continue to be at the mercy of the US-China trade war, but trend higher in 2019, while palm oil prices are expected to trade higher year on year as the gap between global palm oil supply and demand narrows.
• For sugar, the bank anticipates a transition towards a tighter global market for 2019/20, with the largest deficit in four years, making sugar the most bullish commodity outlook for 2020, with ICE #11 prices forecast to steadily rise to US14c/lb by Q4 2020.
• Global cotton prices are forecast to trade higher in late 2020, after touching three-year lows in late 2019. Rabobank expects ICE #2 Cotton futures to reach to US72c/lb by Q4 2020.

For Australia, Rabobank senior grains analyst Cheryl Kalisch Gordon said, with current Australian dollar (AUD) expectations, the bank’s global wheat forecast puts the export parity price at AUD285-290/tonne for the Australian harvest next year.

“For barley, global markets will be weighed down by growing stocks and subdued demand from China, while the soybean and palm oil outlooks lend support for upside in global canola pricing over the next 12 months,” she said.

Rabobank commodity analyst Charles Clack said the bank saw Australian sugar prices moving above AUD450/t in 2020, with depreciation of the Australian dollar (against the US currency) and the rise of global prices assisting local growers.

“Although further upside from this price could be limited by Indian exports and a potential shift in the Brazilian sugar mix,” he said.

For Australian cotton, new season production appears particularly tight – with between 760,000 and 800,000 bales forecast.

“This will keep domestic supplies tight, basis relatively strong and prices above the AUD550/bale level, approaching AUD600/bale in late 2020,” he said.

Source: Rabobank