September 24, 2009

US' Rabobank Agri Commodities has released its outlook for wheat, corn and soy on September 23, estimating that wheat production would decrease sharply while corn and soy will fight over acreage may cause price increases.

Seasonal conditions were relatively favourable for Northern Hemisphere production, and further buildup in world stock levels would keep prices on the defensive throughout the 2009-10 season, Rabobank said.

Wheat prices were likely to see some further downside pressure over the short term, and likely to show a modest recovery moving into 2010, Rabobank said.

Rabobank expected a significantly smaller world wheat crop in 2010, with farmers reducing their plantings and input applications based on lower returns.

Low corn prices were likely to encourage additional demand, and corn acreage needs to increase in 2010-11 to support prices long term, Rabobank said.

Corn price movements would continue to be influenced by weather developments in the immediate future, which would keep price volatility relatively high, Rabobank said.

The corn market should see some recovery into the first half of 2010, as the battle for acreage between corn and soy was likely to result in an appreciation of prices, Rabobank said.

There would be ongoing strong global demand for soy, and the increased reliance on US export supplies would keep the US new crop balance sheet tight, Rabobank said.

Soy prices were likely to come under seasonal harvest pressure over the coming weeks as new crop supplies began to fill depleted old crop pipelines, Rabobank said.