As the year winds down it's time to look ahead to 2015 and Rabobank's Agri Commodities Markets Research analysts are doing just that. They conclude that the fundamentals in the commodity markets appear more balanced through 2015 but expect to see narrower trading ranges for many commodities versus 2014.
The demand side shows that growth has slowed, but lower price levels should push up consumption to support prices. The bank says key variables to watch in the year ahead include U.S. dollar strength, uncertain Chinese demand growth, slowing biofuel demand and weaker oil prices.
In a press statement promoting the report, Stefan Vogel, global head of Rabobank Agri Commodities Markets Research, says: "2015 will be another interesting year for agri commodities. Macro drivers remain very much in play and price swings from supply and demand shocks are still likely, given that the stocks for most commodities are not yet at levels necessary to provide an adequate buffer."
While the Eurozone has seen soft performance, Rabobank sees the United Kingdom and the United States as "bright spots for 2015, but their pace of expansion will be tempered by slow growth elsewhere."
The key number in the report may be Rabobank's expectation that in 2015 China could make a downward revision in expected growth from 7.5%. A drop in China could be a market chiller in the future.
The supply side shows how weather anomalies can make a difference. In 2014 ag weather was favorable for higher output. The analysts at Rabobank are keeping an eye on the risk of a weak-to-moderate El Nino and other weather threats is important because they can cause prices to move in ways not predicted in the report.
The report can be obtained through Rabobank. The chart below shares the highlights from the report: