Agri-commodity prices forecast to remain volatile

Crude palm oil is  checked for quality control in a processing plant in Langkat,  in Indonesia's...
Crude palm oil is checked for quality control in a processing plant in Langkat, in Indonesia's north Sumatra province. Photo from Reuters.
Volatility in agri-commodity prices looks likely to continue into 2013, particularly for grain and oilseed markets, a new report from Rabobank shows.

A supply squeeze in those markets in the first six months was expected to push prices higher before an expected production rebound led to a weakening in the second half of the year.

Soymeal was likely to show the largest price decline by the end of the year, while the bank's analysts expected palm oil to be the strongest performer.

The outlook for soft commodity markets - sugar, cocoa and cotton - was neutral to slightly bearish next year.

Weak global economic growth and continued macro uncertainty might cause a slight drag of demand for agricultural commodities. However, a low United States dollar would provide support for prices, Luke Chandler, who heads Rabobank's agri-commodity markets research department, said.

The ASB New Zealand commodity price index fell 1% in New Zealand dollar terms over the week to November 23, as the 1.4% lift in the NZD outpaced the 0.4% increase in USD commodity prices.

Silver Fern Farms latest market update showed lamb markets remained steady, although most interest was for short-term rather than longer-term programmes.

Importers were looking forward to the start of the festive season after sluggish venison sales for premium value cuts in recent months.

Economic conditions in Europe were continuing to weigh heavily in key markets, with poor demand for higher value middle cuts, especially frozen loins.

Chilled venison sales had been reported as satisfactory.

Asian beef markets remain firm, with beef kills still relatively slow against solid demand for chilled and frozen cuts.

China continued to increase its beef buying for a range of secondary beef cuts and that was continuing to underpin price growth in traditional markets of Korea, Japan and Taiwan.

The European market remained a concern, with sluggish demand and heavy inventories of chilled beef in the market.



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