WHEAT
• Near-term price forecasts have increased sharply, with Q4 2010 prices now expected to average USD 7.00/bu.
• Rabobank has raised its price outlook for the 2010/11 season across the curve, following production shocks and export bans in Russia. We remain neutral at current prices but extremely sensitive to any further production setbacks, with heightened volatility expected this season.
CORN
• We have raised the trajectory of our corn price forecast, with 1H 2011 forecast lifted from an average of USD 4.20/bu to USD 4.50/bu.
• We have strengthened our bullish outlook for corn prices in 2010/11 on the basis of a stronger export program from the US and heightened concern that the USDA overestimated its US corn yields in its August WASDE. Fundamental risks appear clearly skewed to the upside.
SOYBEANS
• Forecasts shifted higher along the curve.
• Higher grains prices and strong demand backdrop have forced us to lift our soybean price forecasts. If US yields reach the USDA’s forecast of 44 bu/acre, then we expect prices to track a relatively neutral path from current levels. However, if yields underperform, we see further upside for prices.
SUGAR
• Forecasts shifted higher in the near-term and for 1H 2011.
• Recent weather events have tightened our outlook for the global sugar supply and demand balance. A smaller surplus means less capacity to rebuild stocks following two significant deficits, which in turn suggests prices will remain at the upper end of the USc 15 to USc 20/lb range in the short-term.