agri commodities monthly may final · 2013/14 on reduced cane and beet area corn coffee despite...

May 2013 1

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Agri Commodity Markets Research (ACMR) [email protected]

+44 20 7664 9676

The transition from record tight old crop inventories to potentially the largest positive change in grain and oilseed stocks since 2009 is anticipated to result in short‐term elevated volatility and multi‐year low prices at harvest time.

GRAINS & OILSEEDS SOFTS

WHEAT SUGAR

Wheat forecasts lowered on increased global supply recovery and weak corn price outlook Increased Black Sea production and Indian export

potential bearish for prices Reduced supply in the US not enough to offset

large increase in global output in 2013/14

Nearby sugar prices are under pressure following a strong start to the Brazilian crush, with longer term support for prices

Ethanol production expected to absorb a greater proportion of the Brazilian cane crop in 2013/14

Growth in global ending stocks to slow in 2013/14 on reduced cane and beet area

CORN COFFEE Despite planting delays and lower yield expectations the corn market is set for a correction lower due to a large increase in supply Planting delays in the US may negatively impact

yield and total area, but a bearish 2013/14 harvest is still expected

Global corn ending stocks to recover 23% in 2013/14

Price outlook for both coffee varieties is positive Arabica is forecast higher on fewer Milds

available due to disease and reduced Brazilian selling

Robusta prices are expected higher to encourage Vietnamese farmers holding beans to sell

SOYBEANS COCOA Our Q2 price forecast is raised while lower prices expected by Q4 due to record US plantings Higher US plantings likely to allow prices to ease

by the end of 2013 Support provided by Chinese purchases

We maintain a bullish outlook for cocoa terminal prices Increased nearby price forecast based on lower

arrivals in West Africa and increased buying support from speculators

Consecutive deficit for 2013/14 season as production stays flat and grindings grow steadily

PALM OIL COTTON Nearby price forecast for palm oil is unchanged and above spot prices, deferred contract outlook reduced on reduced stocks Malaysian stock drawdowns are supportive of

prices Improvement in demand and slow increase in

production to support prices

The cotton market has weathered recent bearish announcements with considerable caution

Market’s reaction to increasing old crop stocks and subdued US export sales was largely muted

Speculative net length is still well above average, selloff expected in June

Agri Commodities Monthly

Bearish Weather

May 2013 2

The transition from record tight old crop inventories to potentially the largest positive change in grain and oilseed stocks since 2009 is anticipated to result in short‐term elevated volatility and multi‐year low prices in the medium term. The expectations for the move from scarcity to surplus is typified by the May USDA WASDE report, with very tight ending stocks expected for 2012/13 and record large global soybean, corn and wheat crops forecast in 2013/14. However, this is merely a paper surplus at the moment, and weather conditions remain a variable that could stymie potential. The bearish outlook on supply is impacting non‐commercial trading activity in US agri markets, with managed money increasing short exposure by 70% in the past 12 months, while index funds have pared back net long exposure by 19%. The managed money short position has been reduced in the past month due to planting delays, further selling can be anticipated once US crops are sown. Managed money selling ahead of harvest will likely be the catalyst to send prices below 2012 levels. Index fund positioning is difficult to foresee, but the net long position is only 3% above the 2012 low when bearish forecasts presaged a major drop in prices and before the US drought. However, the index fund position has the scope for further reductions given the performance of other markets; YOY the S&P 500 is up 28% while the S&P agri index is flat. Commodity markets are also being impacted by bearish macro impacts with a strong US dollar putting pressure on agri prices. Growth in US equity markets and improved expectations for the US economy have supported the dollar in the past month, which in turn results in falling dollar denominated agri markets. Concerns about easing commodity demand has impacted commodity based currencies, with the Australian dollar and Brazilian real falling against the US dollar by 6% and 2% respectively, in the past month. This dynamic may negatively impact US agri exports, shifting more demand to other origins but also encourages stronger farmer returns in locally denominated currencies.

OUTLOOK

Rabobank quarterly average price forecasts

Source: Bloomberg, Rabobank

The YOY change in global G&O ending stocks in 2013/14 is forecast by the USDA to be the largest since 2009/10

Open interest in the US agri markets has increased YOY for managed money on increased shorts and fallen for index funds

Source: USDA, Rabobank Source: Rabobank, CFTC, Bloomberg

Commodity unit Q2'12 Q3'12 Q4'12 Q1'13 Q2'13(f) Q3'13(f) Q4'13(f) Q1'14(f)

Wheat (CBOT) US¢/bu 641 871 846 739 700 630 610 610Wheat (Matif) EUR/t 212 259 264 245 220 195 190 190Corn US¢/bu 618 783 737 715 650 580 500 490Soybeans US¢/bu 1426 1677 1484 1450 1425 1275 1175 1225Palm oil MYR/t 3225 2884 2270 2400 2400 2450 2400 2500Sugar US¢/lb 21.2 21.0 19.7 18.4 17.2 17.5 18.0 19.0Coffee (ICE) US¢/lb 170 172 152 144 140 155 155 150Coffee (Liffe) US$/t 2065 2095 1961 2051 2025 2075 2075 2100Cocoa (ICE) US$/t 2222 2438 2421 2177 2350 2475 2475 2500Cocoa (Liffe) GBP/t 1492 1622 1550 1432 1525 1650 1650 1675Cotton US¢/lb 81 73 73 82 83 80 85 85

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Index Funds Managed Money S&P Agri Index (RHS)

May 2013 3

The outlook for new crop wheat prices has weakened amid a strengthening Northern Hemisphere supply recovery. Feed demand support in the wheat market due to high corn prices will likely erode in 2013/14, while increases in global wheat supply, notably in the Black Sea region, are likely to weaken prices in 2H 2013. Speculators have pared back shorts in US wheat markets since March, but as corn planting in the US nears completion, we anticipate short selling pressure to build again. Winter crop conditions in the US are at historic lows, but an increase in spring wheat will offset some reduction in output. In the short term, wheat prices will likely move based on crop conditions in the Black Sea region and indications about the US corn crop. In the medium term, we expect a better supply of corn and increased availability of exportable wheat in the EU and Black Sea region to push values to early 2012 levels. The USDA’s May WASDE report was within market expectations and painted a bearish outlook for 2013/14, with a 7% increase in global production more than offsetting an increase in expected demand. The forecast YOY increase in output was in part a function of a 47% jump in combined Russian, Ukrainian and Kazakh harvests on expanded area and better yields. In our view, this optimistic projection is too high; we expect the three nations will achieve a 42% recovery in output from last season’s drought. We forecasts a 38%, or 9 million tonne YOY, increase in exports and a bearish impact on global wheat prices. Despite some localised dry conditions in the Black Sea region, we do not think a material reduction in yield is justified at this stage. As Russia will likely be the low cost origin in the new season, our price forecast takes into consideration the Russian intervention price near USD 6/bu and the level Russian wheat would no longer be exported.

A rebound in Black Sea region wheat output will lead to an increase in exports and will pressure global wheat prices

Wheat market prices have fallen in 2013 and further weakness in the coming months is expected given average weather

Source: Rabobank, USDA Source: Bloomberg, Rabobank

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WHEAT

New crop CBOT Wheat price forecasts lowered

Wheat forecasts lowered on increased global supply recovery and weak corn price outlook Increased Black Sea production and

Indian export potential bearish for prices

Reduced supply in the US not enough to offset large increase in global output in 2013/14


unit Q3'12 Q4'12 Q1'13(f) Q2'13(f) Q3'13(f) Q4'13(f) Q1'14(f)

CBOT US¢/bu 871 846 739 700 630 610 610

Matif EUR/t 259 264 245 220 195 190 190

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CBOT Wheat Previous Forecast Rabobank Forecast

May 2013 4

The US wheat crop is forecast by the USDA to fall 9% YOY due to a lower HRW crop and the likelihood the USDA is overestimating domestic demand. The USDA reduced the domestic wheat feed use forecast for 2013/14, but the expectation is still 67% above the ten‐year average, and in our view not likely to be realised if corn supplies are increased near projections. We also view the expectations for lower than expected US wheat exports as high given the likelihood exports from the Black Sea region, Europe, Australia and even India will win more global market share due to lower prices. With less domestic wheat shipped or used as feed, we expect the USDA’s forecast for US wheat ending stocks to fall 8% to a four‐year low will be revised in the coming months. We have reduced our Matif Wheat price forecast on the expected increase in EU production and the plentiful Black Sea region supplies. The outlook for European wheat supplies is favourable, and we continue to anticipate that production will increase 7% YOY, while ending stocks will increase 53% in 2013/14. A build up of stocks is expected to be a function of exports falling due to lost market share in North Africa as a result of cheaper Black Sea region supplies. Front month Matif prices are 25% below the 2012 high, and we believe there is further scope for downside correction; we are targeting a support level of EUR 190/tonne average reached in 2H 2011. Matif Wheat’s nearby premium to CBOT is expected to fall in the coming year due to these dynamics. In the US wheat market, speculators have covered shorts in the past two months as planting delays and conditions increased concerns for new season supplies. However, given our supply outlook we expect increased selling as supply risks diminish. The managed money gross short position in the CBOT Wheat market fell 27% since mid‐March as US winter wheat conditions suggested reduced yield and falling YOY output. Corn planting delays have also spurred short covering in the wheat market. The CBOT Wheat managed money net position remains short 17,225 contracts off the March high of 50,000 contracts net short. We anticipate the net position will swing back near the 50,000 contract short level seen in March as the abundant supply of global wheat, reduced domestic demand and increased supply of corn all suggest the current curve is high. As the risk premium erodes approaching the main winter wheat harvests in June, and as the corn planting season ends, speculators will be looking to increase short exposure. Volatility in the US wheat markets has increased in the past six weeks, and as weather remains the key price mover it is likely to remain elevated for the next four weeks. The 50‐day historic volatility for the September CBOT Wheat contract increased 60% since the start of April to a level not seen since mid‐2012. Historic volatilities in the agri markets were at artificially low levels at the start of the year. In our view, multi‐year low volatility was more a function of increased financial liquidity into markets than a reflection of market fundamentals. The wheat deficit in 2012/13 was 24 million tonnes, the largest since 2003/04 and did not suggest falling volatility. As winter wheat harvests wrap up at the end of June and corn plantings begin by early June, volatility may plateau, and as global stocks are rebuilt further upside volatility risk seems reduced.

Winter wheat good/excellent conditions are at five‐year lows, and the US crop is expected to fall 7% YOY for 2013/14 as a result

Managed money net short position in the CBOT Wheat market has fallen in the past two months but is forecast to expand

Source: USDA ,Rabobank Source: CFTC, Rabobank

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May 2013 5

The outlook for corn prices remains bearish, with prices expected to fall to their lowest levels since 2H 2010. The basis for our outlook for new crop price declines is based on a large production recovery and resultant surplus of supply. The tight US old crop corn situation is likely to play out in interior basis levels and cash markets, but flat price rallies remain a risk given the low inventories and large speculator short position. A risk premium and the need to constrain old crop consumption will limit downside price risk for the July CBOT Corn contract, and the old crop/new crop inverse is likely to remain at historic highs. The current planting delays will extend the old crop season, straining already low supplies and moderating the bearish impact for the September CBOT contract. Further destocking and reduced exports are likely for the US for 2012/13, assuming average weather for the new crop. For 2013/14, our forecasts suggest that while demand will rebound domestic ending stocks will more than double, and global supplies will be sufficient to push prices to our forecast for December; 4% below the current curve and 8% below year earlier levels. Prices for old crop futures contracts (July and to a lesser extent September) will need to ration demand as planting delays will pressure already tight supplies. The USDA forecasts 2012/13 domestic ending stocks at 759,000 bushels, or 24 days of annualised demand. With the most active harvesting period for the Corn Belt likely shifting later from the usual October period due to the delay in plantings, the market will have to incentive users to sell back old crop supplies and shift usage forward. We expect the July/December inverse will remain at record highs and that the September/December inverse will likely expand assuming normal agronomic development.

CORN

CBOT Corn price forecast lower for new crop

Despite planting delays and lower yield expectations; the corn market is set for a downward correction due to a large increase in supply Planting delays in the US may

negatively impact yield and total area, but a bearish 2013/14 harvest is still expected

Global corn ending stocks to recover 23% in 2013/14


The CBOT July/December inverse is expected to remain high due to tight old crop supplies and a large new crop forecast

US corn planting pace is below average, threatening yield potential and likley leading to a later harvest date

Source: Rabobank, Bloomberg Source: Rabobank, USDA, Bloomberg

unit Q3'12 Q4'12 Q1'13(f) Q2'13(f) Q3'13(f) Q4'13(f) Q1'14(f)

Corn US¢/bu 783 737 715 650 580 500 490

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May 2013 6

In our view, the key bearish impact for the new season will be the increased global supply of corn and less need for US exports. The USDA forecasts 2013/14 US exports to increase 71% YOY from the lowest level since 1970/70. However the rebound is likely to be moderated by the increased supply of foreign corn, as well as other grains in the new season. The 2013/14 US corn export forecast is 29% below the ten‐year average. The US export share of global corn shipments will increase 12 percentage points YOY in 2013/14 to 35 %, but the ten‐year average is 53%. As US exports remain modest due to a 23 million tonne increase in foreign production, the domestic ending stocks are forecast by the USDA to increase 164% YOY. While the 2013/14 US corn production forecast will likely be revised lower in the coming months, we anticipate the expectations of a significant build up of domestic stocks to remain and this to further weigh on CBOT Corn prices. US corn ethanol production has strengthened in the past two months on improved margins, but further growth will be a challenge given tight old crop supplies. The recent increase in ethanol output prompted the USDA to increase the 2012/13 corn used for ethanol forecast by 50,000 bushels in the May WASDE, the second revision higher in as many months. However, ethanol output remains below the 2011/12 pace, and the USDA expects a YOY drop of 8%. Demand was reduced due to negative margins at the start of the 2012/13 season, a function of high corn prices. Our analysis suggests US ethanol net margins have turned positive, but are still thin and a strengthening corn price would likely turn them negative quickly. Given the profitability, we anticipated the increase in the 2012/13 forecast, but further growth in the current season is not possible without reducing feed consumption or exports. To reduce the feed use or exports, old season corn prices would have to rise further, which in turn would crimp ethanol margins and use. The USDA forecasts 2013/14 corn for ethanol use at 4.85 billion bushels, 5% above the current season but 5% below the preceding two seasons. With the blend wall of 10%, falling gasoline consumption is constricting the amount of corn ethanol that can be used in the domestic gasoline supply. Policy actions could alter the scenario and are an elevated risk in this situation. If margins remain positive in the new season, which is likely given lower corn prices, demand could expand through exports. Final US corn planted area and yield will likely not meet initial USDA forecasts, but a large crop is still expected. The USDA’s harvested area forecast of 89.5 million acres is at high risk of being revised lower in the next WASDE report due to planting delays moving area into other row crops or the prevent plant programme. Rabobank currently forecasts harvested area at 88 million acres and a yield of 157 bushels an acre. The USDA reduced its yield outlook 3% from the February outlook projection to 158 bushels an acre. Assuming average weather conditions for the summer and that a majority of the Corn Belt can be planted before the end of May, they are likely to make only modest revisions to this estimate. If the USDA reduces its area forecast by 3%,harvest area would fall to 87 million acres and the final crop, assuming the 158 bushels an acre yield, would slip to 13.7 billion bushels. Assuming current USDA 2013/14 consumption estimates, the reduced crop would result in domestic ending stocks of 1.58 billion bushels, up 108% from 2012/13 and the highest since 2009/10.

Ethanol production has risen in the past two months, but given tight old crop corn stocks, a drop in output is likely by season end

Rabobank forecasts an 88 million acre harvested area for the 2013 US corn crop, and a 13.9 billion final crop

Source: Bloomberg, Rabobank, DOE Source: USDA, Rabobank

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May 2013 7

Price outlook for soybeans is bearish but supported by strong biofuel and Chinese demand. Despite recent increases in near‐term contracts, fundamentals for soybeans continue to be bearish. The record large South American harvest has now been realised and exports have started flowing into world markets, while projections for US area and yield estimate a 12% increase in production for the new season. Risk remains on US production weather‐wise, particularly with the delays in corn planting. If US farmers are unable to realise their corn planting intentions, acreage will turn to soybeans, which can be planted well into June. This poses additional bearish risk for soybeans. Support for prices in 2H will come from US biodiesel demand and expectations for strong purchases from China. Biodiesel use in the US is expected to increase as a result of both the Renewable Fuel Standard—which allows a gallon of biodiesel to replace 1.5 gallons of the corn ethanol mandate—and the biodiesel tax credit. July futures may still see some upside before expiration, as a result of the tight old crop situation in the US. With delays in South American exports, the US soybean market has tightened further, widening the spread between old crop soybeans and new crop soybeans to over USD 2. After stronger than usual exports in the first quarter of the year, US exports fell by 53% in April and show little activity in May. The scarcity of soybeans has affected processors and crush margins, with April crushing below 3.5 million tonnes, an 8% decrease from last year. We expect prices for the July contract to continue to hover above USD 14.25/bu before falling in the third quarter as planting intentions materialise. Meanwhile, it seems likely that the US will need to import soybeans before its September harvest to relieve the domestic market.

The spread between July and November contracts increased to over USc 200/bu as a result of tightness in old crop stocks

South American exports picked up in April and May, compensating for the decline in US exports

Source: Bloomberg, Rabobank Source: Bloomberg, USDA, Rabobank

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SOYBEANS

Nearby CBOT Soybean price forecast adjusted modestly

Our Q2 price forecast is raised while lower prices expected by Q4 due to record US plantings Higher US plantings likely to allow

prices to ease by the end of 2013 Support provided by Chinese purchases


unit Q3'12 Q4'12 Q1'13 Q2'13(f) Q3'13(f) Q4'13(f) Q1'14(f)

Soybeans US¢/bu 1677 1484 1450 1425 1275 1175 1225

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CBOT Soybeans Previous forecast Rabobank forecast

May 2013 8

South American exports picked up their pace in April and May. After a slow start to the South American season due to delays in Brazil’s transportation facilities and Argentina’s slow pace of farmer selling, exports have increased markedly in April and May. Due to a change in regulation, some of the major ports in Brazil have started working 24 hours as of mid‐April. Although waiting times at port are still high, exports in April were 7.15 million tonnes, up 61% from last year. May is also expected to show record exports, at approximately 7.6 million tonnes. In Argentina, about 90% of the soybean crop has been harvested, cementing estimates of a 49 million tonne final production. Farmer selling continues to be slow due to the prevailing exchange rate restrictions and the fast devaluation of the peso. In May, the spread between the official and the parallel ‘blue’ exchange rate reached a record level of over 100%. Only 35% of the harvest has been sold so far, in comparison to 60% at this time last year. Despite the slow selling, both exports and the crushing industry gained momentum in the past month. Exports from both countries in April‐May will reach 3.15 million tonnes, 64% above year ago levels, offsetting the decline in US soybean exports. Market attention is turning to US planting progress and new crop expectations. The USDA released its global balance sheets for 2013/14 on May 20th, forecasting a global increase in soybean production of 16 million tonnes, or a 6% increase with respect to last year. Most of this increase comes from an expected 10.2 million tonne growth in US production as a result of improved yields. Our estimate for soybean acreage is at 78.2 million acres. Assuming trend yields, our final estimate for US production is 91.3 million tonnes, barely 1 % lower than the USDA’s estimate. However, it is still early in the season, and risks to the upside and downside exist. Drier weather in the past week has allowed substantial progress in US corn planting, currently at 71%, and the remaining ten days remain critical. If corn planting intentions are not fully realised by the end of May, some acreage may turn to soybeans. Given the tightness of the current US soybean situation, there is little cushion for crop losses, and any weather disturbance during the season can send prices for soybeans higher than we are presently expecting. The strongest price support will come from Chinese demand, which is likely to pick up with higher global availability and reduced prices. Domestic production in China is expected to be 5% lower than the previous year, and domestic stocks are low after a lull in purchases during the first four months of the year. Also, demand for soymeal seems to be unabated by the recent outbreaks of avian flu. The China National Grains and Oils Centre has recently announced projected imports for 2013/14 at 66 million tonnes. Although this number is lower than the USDA’s 69 million tonne estimate, it is still up 11.9% from last year. This increase would be almost enough to offset the increase in production in the main exporting countries, meaning that global stocks, while replenished, are not expected to be ample by any extent, and any unexpected shock to production can alter our forecasts.

Chinese imports have been at record low levels, and a strong re‐stocking is expected in the coming months

US soybean area harvested is expected to be record high in 2013/14, with yields up 4.9 bu/acre YOY to 44.5 bu/acre

Source: USDA, GTIS, Rabobank Source: USDA, Rabobank

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May 2013 9

Reduced stock levels in Malaysia are likely to support MDEX Palm Oil prices above MYR 2,300/tonne for the

remainder of Q2. Malaysian stocks fell below 2 million tonnes for the first time in the past nine months,

dropping 11% to 1.92 million tonnes in April. While this is the fourth consecutive monthly decline, stocks are

still 4% above year ago levels, and further drawdown will be needed to provide stronger upward support to

prices. Slower export pace in the early part of Q2 weighed on prices. However, we expect a recovery in exports

over the coming months, which will likely place further downward pressure on stock levels and support prices.

Slower increases in production coupled with a stronger export outlook is expected to support prices in Q2

and early Q3. Indian palm oil imports declined in April by 28% MOM. However, exports to India are expected to

pick up slowly in the coming months despite imports being 26% higher MYTD. We expect Indian imports in the

coming months to stay within the five‐year historical range. China’s palm oil import are also up by 12.8% in the

first half of the marketing year 2012/13. A surge in Chinese palm imports in the first half of the year are

expected to moderate demand and keep imports range bound for rest of the marketing year. The onset of the

key festival season from July is expected to maintain buying interest from consuming nations. However, the

higher stock levels in key consuming countries, such as India and China, would limit the upside in prices.

Indian palm oil imports expected to pick up in coming months after the decline in April

Malaysia’s palm oil stocks fell 11% MOM in April but remained 4% above year‐ago levels

Source: Bloomberg, MPOB, Rabobank Source: USDA, Rabobank

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PALM OIL

MDEX Palm oil price forecast unchanged for nearby contracts

Nearby price forecast for palm oil is unchanged and above spot prices, deferred contract outlook reduced Malaysian stock drawdowns are

supportive of prices Improvement in demand and slow

increase in production to support prices



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May 2013 10

Weather is in the driving seat of the sugar market, and while we consider that the market is approaching a turning point, trade is likely to maintain a narrow range. Favourable conditions during the Brazilian Centre/South harvest to‐date have supported cane volumes and ATR levels, which are at the highest rate since 2010/11. This has boosted both sugar and ethanol production rates early in the season and is pressuring nearby prices. The typical seasonality of ethanol prices suggests that they will be at their lowest in May/June/July and should rise in 2H of the year, raising the sugar/ethanol equivalence point. We expect that 54% of the Centre/South harvest of 585 million tonnes of sugarcane in 2013/14 will be converted to ethanol, largely absorbing the 9% growth in the crop YOY. Raw sugar futures are expected to continue trading within a narrow range, and the hydrous ethanol arbitrage and weather risks should limit downside price movements throughout the remainder of Q2. Index traders have built their net long position to over 56,000 contracts, the longest level since February 2013, and price levels are supportive of more buying. Meanwhile, managed money is eroding its net short position in the ICE #11, and we view these factors as supportive for the market from current levels, particularly for the remainder of Q2 2013.

The growth of global sugar ending stocks is expected to slow in 2013/14 for the first time in four years, increasing 1% YOY or 650,000 tonnes. Our preliminary view of global S&Ds is for record 2013/14 sugar consumption of 173.5 million tonnes, up 2% YOY, while production is expected to contract 7 million tonnes on a 23% reduction in the ICE #11 YOY. This scenario is supportive of sugar prices in 2H 2013, and 2014 is driving our current price forecasts which are above the curve. China’s sugar consumption is expected to grow 5% YOY to 16.3 million tonnes, while Russian beet area will contract, curbing production by 12.5% YOY. Indian consumption is expected to exceed production by 1.6 million tonnes, driving a draw down in stocks. However, another drier‐than‐normal monsoon may well encourage imports, and this could drive prices above our current forecast.

Cane volume used in ethanol production has been weaker than anticipated—upside expected from current levels

Favourable harvest conditions throughout Brazil have accelerated sugar and ethanol production

Source: UNICA, Rabobank Source: NOAA, Rabobank

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SUGAR

Sugar forecast has been adjusted lower

Nearby sugar prices are under pressure following a strong start to the Brazilian crush Ethanol production expected to absorb

a greater proportion of the Brazilian cane crop in 2013/14

Growth in global ending stocks to slow in 2013/14 on reduced cane and beet area



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May 2013 11

COFFEE

Robusta price forecasts lowered

Price outlook for both coffee varieties is positive Arabica is forecast higher on fewer

Milds available due to disease and reduced Brazilian selling

Higher Robusta prices are expected to encourage Vietnamese farmer selling


We anticipate Arabica prices will break out of recent trading range in the coming quarter on reduced Central American supply and falling certified stocks. A key factor in the coming quarter is the Brazilian harvest, which we forecast at 53 million bags, the largest off season crop. While the increased supply from a fundamental view is bearish, the policy impacts offered by the Brazilian government are expected to reduce price impacts. Brazilian farmers are likely to hold supply off the market if prices remain depressed. This expected reduced farmer selling in Brazil, coupled with a 15% reduction in Central American supply YOY due to rust disease will support the NY market. With less selling of Arabica, certified stocks are likely to be drawn down in the coming quarter, tempering a bearish supply outlook. Robusta prices are expected to increase in order to encourage farmers to sell stocks. Vietnamese farmers are likely holding significant supplies on farm, and as London prices have fallen exports have dropped. April exports from Vietnam fell 26% YOY. Lower inventories in bonded warehouses in Vietnam, and stable but relatively low amounts in Liffe certified stocks in the past month, suggest exports will have to increase in the next quarter. This will likely require higher prices in London. Selling pressure from speculators in the coffee markets will likely be moderate in 2H 2013 due to production risks in Brazil and disease in Central America. The managed money gross short position in the NY market has fallen 47% in the past eight weeks as speculators took bearish bets off ahead of the Brazilian frost season and concerns about Roya increased. As weather risk is eroded for the Brazilian harvest, the net short is likely to expand, but concerns about the Central American supply may temper selling enthusiasm.


ICE US¢/lb 172 152 144 140 155 155 150

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Vietnamese exports in April were at a five‐year low as falling London prices prompted farmers to hold back beans

Arabica prices have continued to find support in the low USc 130/lb level first reached in December 2012

Source: Rabobank, Anacafe Source: Rabobank, Bloomberg, Liffe

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May 2013 12

Our cocoa price outlook remains bullish and our price forecast for the nearby has been slightly increased for Q2 2013, reflecting tightening fundamentals for old and new crop and further speculator buying. Based on recent data, we have reduced our forecasts for production in West Africa, which in turn has increased our forecast global deficit for 2012/13. Speculators have shown increasing interest in the cocoa market and have been covering their short positions and building up their long position in both New York and London. This has resulted in a net long position on ICE of 45,276 contracts, which is the highest net long position since 2007/08 and is 52% higher than the YTD average. In London the net long managed money position increased to 42,068, which is 23% higher than the YTD average. In addition, speculators may buy as cocoa remains undervalued relative to other agricultural commodities, which is demonstrated by a comparison of the normalised ICE bean price with the S&P agri index as of 2009. We expect global production to stay flat given average weather conditions and grindings to grow modestly for the next crop year, leading to a global deficit in 2013/14 of 75,000 tonnes compared to an earlier deficit in 2012/13 of 58,000 tonnes. The production outlook in West Africa remains neutral, while in Asia, output is affected by deterioration of Indonesian crops caused by poor yields, diseases and competition from substitution crops. Lower farmgate prices during the last season have not been supportive of farmer input use and may negatively impact yields in the next season. Overall, the global deficit will translate into a stocks‐to‐use ratio of 41%, compared to 44% in 2012/13. We expect grindings to grow modestly in 2013/14 following the ten‐year moving average of 2.4%, resulting in a total global demand of 4.05 million tonnes. A key factor in this case is improving processing margins on the back of increasing butter ratios and stabilised powder ratios.

The stocks/grindings ratio is predicted to fall for the second consecutive season in 2013/14

Cocoa prices remain undervalued with bean prices being relatively low compared to other agricultural commodities

Source: Rabobank, ECA Source: Rabobank, Bloomberg

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ICE Cocoa Liffe Cocoa SPGSAG Index

COCOA

Our cocoa price forecast has been lifted modestly

We maintain a bullish outlook for cocoa terminal prices Increased nearby price forecast

based on lower arrivals in West Africa and increased buying support from speculators

Consecutive deficit for 2013/14 season as production stays flat and grindings grow steadily



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ICE NY cocoa Previous Forecast Rabobank Forecast

May 2013 13

Nearby cotton futures remain have eased in line with our view, and the market has weathered recent bearish announcements with considerable caution. Supply and demand fundamentals are looking increasingly bearish across the short and medium term, despite an expected reduction in 2013/14 exportable supplies. Old crop global ending stocks increased 3% in the USDA’s May WASDE, and US export sales declined to 73,984 million bales in mid‐May—the lowest level since October 2012. However, the market’s reaction was largely muted, until China’s April imports dropped 19% MOM, as the Chinese Government’s reserve purchase program typically draws to an end in March. Speculative net length is still around 37,000 lots above average levels, and we expect a speculative led selloff to pressure prices in June, prior to the roll of the July contract. The futures curve shifted only modestly lower following a particularly bearish May WASDE, with global production estimates at 5 million bales above trade expectations. However, US plantings continue to trail the five‐year average despite a recent pick up, and are supporting December 2013 prices to a degree.

Our central view is for global cotton acreage to ease 9% YOY in 2013/14 to 30.9 million hectares. However, Southern Hemisphere cotton acreage could come in larger than anticipated if Northern Hemisphere corn and soybean production reach our expectations in 2013/14 and pressure prices. The March 2014 price ratios of cotton (USC 84.8/lb) to soy (USc 1,237/bu) and cotton to corn (USc 533/bu) are currently supportive of annual growth in Southern Hemisphere cotton acreage at current price levels. However, delayed US corn plantings may limit corn yields, potentially increasing the new crop corn premium, and encouraging Brazilians to plant additional acres to corn over cotton. The Southern Hemisphere cotton crop plays an increasingly important role in the global cotton market as it is available at the beginning of the Chinese National Cotton Reserve’s procurement window—from September to March. China currently accounts for near 40% of global cotton imports and controls around half of the global cotton supply. We expect cotton prices to average USc 85/lb in Q4 2013. However, further upside is not out of the question yet.

Speculative net length is well above average levels, despite record global ending stocks

New crop Southern Hemisphere acres dependant on a record global corn crop to strengthen cotton price margins

Source: Rabobank, Bloomberg Source: Rabobank, Bloomberg

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COTTON

Cotton price forecast is maintained

The cotton market has weathered recent bearish announcements with considerable caution Market’s reaction to increasing old crop

stocks and subdued US export sales was largely muted

Speculative net length is still well above average, selloff expected in June



Cotton US¢/lb 72.8 72.8 82.4 83.0 80.0 85.0 85.0

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5-yr-average

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May 2013 14

Monthly Chart Pack

May 2013 15

Global Corn Supply & Demand

(1000 Ha/1000 Mt) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)

Beginning Stocks 110,618 131,649 147,679 145,969 128,114 136,714 126,796 136,714 129,919

Area Harvested 160,570 158,833 158,664 163,781 169,676 173,076 177,748 174,409 176,940

Yield 4.95 5.04 5.19 5.08 5.22 4.9 5.4 4.9 5.5

Production 794,578 800,640 824,168 831,679 885,403 840,615 953,514 857,119 965,939

Imports 98,276 82,559 89,795 92,387 100,806 99,565 103,580 96,565 98,680

Total Supply 1,003,472 1,014,848 1,061,642 1,070,035 1,114,323 1,076,894 1,183,890 1,090,398 1,194,538

Exports 98,632 84,458 96,850 91,473 114,528 87,836 102,581 89,031 104,622

Feed Consumption 498,304 481,505 490,228 501,114 506,093 512,951 547,358 518,350 561,671

FSI Consumption 274,887 301,206 328,595 349,334 356,988 349,311 372,288 353,098 369,123

Total Consumption 773,191 782,711 818,823 850,448 863,081 862,262 919,646 871,448 930,794

Total Usage 871,823 867,169 915,673 941,921 977,609 950,098 1,022,228 960,479 1,035,416

Surplus Deficit 21,387 17,929 5,345 ‐18,769 22,322 ‐21,647 33,868 ‐14,329 35,145

Ending Stocks 131,649 147,679 145,969 128,114 136,714 126,796 161,662 129,919 159,122

Stocks/Usage 17.0% 18.9% 17.8% 15.1% 15.8% 15% 18% 14.9% 17.1%

Global Wheat Supply & Demand

(1000 Ha/1000 Mt) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)


Area Harvested 217,014 224,136 225,183 217,058 221,287 218,305 222,863 215,902 223,611

Yield 2.8 3.1 3.0 3.0 3.2 2.9 3.1 3.0 3.1

Production 612,430 683,659 686,743 652,285 697,173 639,372 694,244 655,637 701,099

Imports 113,594 138,010 133,867 132,113 148,684 144,339 143,735 141,967 140,433

Total Supply 860,295 950,489 989,283 986,086 1,045,065 983,179 1,004,495 997,072 1,021,700

Exports 117,047 144,696 137,123 133,219 157,791 133,112 142,877 137,381 143,324


FSI Consumption 511,773 515,819 529,759 537,838 541,844 547,421 551,714 549,320 555,506


Total Usage 731,475 781,816 787,595 786,878 845,597 816,664 823,382 816,904 835,318

Surplus Deficit ‐1,998 46,539 36,271 ‐1,374 9,367 ‐44,180 13,740 ‐23,886 9,105

Ending Stocks 128,820 168,673 201,688 199,208 199,468 166,515 181,113 180,168 186,382

Stocks/Usage 17.6% 21.6% 25.6% 25.3% 23.6% 20.4% 22.0% 22.1% 22.3%

Source: USDA, Rabobank

USDA

Global Agri Commodity Balance Sheets

USDARabobank

Rabobank

May 2013 16

Global Soybean Supply & Demand

(1000 Ha/1000 Mt) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)


Area Harvested 90,641 96,319 102,250 103,176 102,773 108,617 110,557 108,506 110,286

Yield 2.4 2.2 2.5 2.6 2.3 2.5 2.6 2.5 2.6

Production 219,552 211,602 260,403 263,924 239,459 263,550 277,219 269,106 285,504

Imports 78,349 77,395 86,853 88,729 93,221 94,652 101,905 93,587 104,292

Total Supply 360,537 341,276 390,606 413,461 402,804 412,913 434,358 417,404 452,253

Exports 78,665 76,877 92,033 91,657 91,936 97,394 103,285 96,210 107,122

Crush 202,178 193,112 209,116 221,260 226,783 230,285 238,061 229,288 239,209

Seed/Feed/Residual 27,415 27,937 28,649 30,420 29,374 30,001 30,675 29,449 30,967


Total Usage 308,258 297,926 329,798 343,337 348,093 357,679 372,022 354,947 377,298

Surplus/Deficit ‐10,357 ‐8,929 17,458 9,316 ‐15,413 523 7,103 7,746 12,498

Ending Stocks 52,279 43,350 60,808 70,124 54,711 55,234 62,337 62,457 74,955

Stocks/Usage 22.8% 19.6% 25.6% 27.9% 21.4% 21.2% 23.2% 24.1% 27.7%

Global Palm Oil Supply & Demand

(1000 Mt) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)


Production 41,093 44,054 45,881 48,678 51,855 55,791 58,264 55,291 58,073

Imports 30,725 34,115 35,213 36,293 38,736 40,544 42,481 40,950 42,165

Total Supply 76,499 82,228 85,911 90,407 96,243 103,049 109,003 102,955 108,159

Exports 32,201 34,706 35,512 36,881 39,034 41,214 43,620 41,603 42,785

Food Consumption 30,113 31,701 33,275 34,783 36,303 38,589 39,834 38,549 40,216

Industrial 9,380 10,240 10,874 12,192 13,471 14,088 14,696 14,083 14,758

Feed 746 764 814 899 721 900 1,598 799 811


Total Usage 72,440 77,411 80,475 84,755 89,529 94,791 99,747 95,034 98,570

Surplus Deficit ‐622 758 619 216 1,062 1,544 998 1,207 1,668

Ending Stocks 4,059 4,817 5,436 5,652 6,714 8,258 9,256 7,921 9,589

Stocks/Usage 10.1% 11.3% 12.1% 11.8% 13.3% 15.4% 16.5% 14.8% 17.2%


USDA

Rabobank

Rabobank


USDA

May 2013 17

Global Cotton Supply & Demand

(1000 Ha/1000 480lb Bales ) 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)

Beginning Stocks 61,843 61,542 46,655 49,444 71,223 80,807 71,223 80,807

Area Harvested 30,568 30,133 33,463 35,721 34,075 30,968 34,305 30,968

Yield 3.5 3.4 3.5 3.5 3.6 3.6 3.5 3.6

Production 107,244 102,158 116,331 125,141 121,025 112,443 120,947 112,443

Imports 30,477 36,652 35,912 45,071 41,021 32,000 45,210 32,000

Total Supply 199,564 200,352 198,898 219,656 233,269 225,250 237,380 225,250

Exports 30,303 35,562 35,489 45,868 42,433 32,000 45,008 32,000

Loss ‐2,171 ‐807 ‐389 ‐745 1,412 0 ‐556 0

Use 110,032 118,942 114,354 103,310 108,617 110,916 108,150 110,916

Total Domestic Use 107,861 118,135 113,965 102,565 110,029 110,916 107,594 110,916

Total Usage 138,164 153,697 149,454 148,433 152,462 142,916 152,602 142,916

Surplus/Deficit ‐2,788 ‐16,784 1,977 21,831 12,408 1,527 12,797 1,527

Ending Stocks 61,400 46,655 49,444 71,223 80,807 82,334 84,778 82,334

Stocks/Usage 56% 39% 43% 69% 74% 74% 78% 74%

Global Coffee Supply & Demand

(1000 60 kg bags) 06/07 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f)


Arabica Production 82,197 73,124 82,840 74,512 86,158 78,749 85,766 80,414

Robusta Production 50,067 47,763 53,462 53,817 55,651 60,789 61,651 64,251

Total Output 132,264 120,887 136,302 128,329 141,809 139,538 147,417 144,665

Imports 97,018 97,198 96,931 93,800 105,000 110,000 108,000 112,000

Total Supply 272,377 264,033 267,455 260,118 278,884 285,858 290,662 295,927

Exports 98,000 97,844 97,303 93,000 105,000 110,000 108,000 112,000

Soluble Use 15,400 16,500 15,185 16,500 17,400 18,100 20,100 20,100

Use 113,029 115,467 116,978 118,543 120,165 122,513 123,300 126,926

Total Consumption 128,429 131,967 132,163 135,043 137,565 140,613 143,400 147,026

Total Usage 226,429 229,811 229,466 228,043 242,565 250,613 251,400 259,026

Surplus/Deficit 3,835 ‐11,080 4,139 ‐6,714 4,244 ‐1,075 4,017 ‐2,361

Ending Stocks 45,948 34,222 37,989 32,075 36,319 35,245 39,262 36,901

Stocks/Usage 36% 26% 29% 24% 26% 25% 27% 25%

Global Sugar Supply & Demand (1000 Mt) 06/07 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14 (f)


Production 166,444 166,563 151,292 160,548 166,821 176,868 182,905 175,874

Imports 46,668 45,380 47,750 54,596 52,705 51,444 52,794 55,248

Total Supply 272,135 279,287 267,313 270,719 272,500 284,201 299,406 303,577

Exports 51,303 50,770 50,811 56,543 55,138 54,206 57,506 56,930

Consumption 153,488 160,246 160,927 161,203 161,473 166,288 169,445 173,542

Total Usage 204,791 211,016 211,738 217,745 216,611 220,494 226,951 230,472

Surplus/Deficit 8,321 927 ‐12,696 ‐2,602 2,915 7,819 8,747 651

Ending Stocks 67,344 68,271 55,575 52,973 55,889 63,707 72,454 73,105

Stocks/Usage 44% 43% 35% 33% 35% 38% 43% 42%

Global Cocoa Supply & Demand

(1000 Tonnes) 06/07 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f)

Production 3,400 3,694 3,542 3,550 4,230 4,001 3,992 4,074

Ivory Coast 1,229 1,382 1,222 1,245 1,500 1,475 1,590 1,600

Ghana 614 711 680 620 1,025 879 780 820

Grindings 3,700 3,771 3,519 3,715 3,920 3,916 4,050 4,149

Surplus/Deficit ‐300 ‐77 23 ‐165 310 85 ‐58 ‐75

Ending Stocks 1,645 1,584 1,607 1,442 1,752 1,837 1,780 1,705

Stocks to Use 44% 42% 46% 39% 45% 47% 44% 41%

Source: Rabobank, ICCO, USDA

Rabobank

Rabobank

Rabobank


Rabobank USDA

May 2013 18

US Corn Supply & Demand

(Mln acres/Mln bu.) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)

Beginning Stocks 1,304 1,624 1,673 1,708 1,128 989 736 989 759

Area Harvested 86.5 78.6 79.5 81.4 84 87.4 88.8 87.4 89.5

Yield 150.7 153.9 164.7 152.8 147 123.4 157.0 123.4 158.0

Production 13,038 12,092 13,092 12,447 12,360 10,782 13,941 10,780 14,140

Imports 20 14 8 28 29 125 20 125 25

Total Supply 14,361 13,729 14,773 14,182 13,516 11,896 14,698 11,894 14,924

Exports 2,437 1,849 1,980 1,834 1,543 825 1,500 750 1,300


FSI Consumption 4,442 5,025 5,961 6,425 6,439 5,985 6,635 5,985 6,295

Ethanol Usage 3,049 3,709 4,568 5,021 5,011 4,550 5,200 4,550 4,850


Total Usage 12,737 12,056 13,066 13,055 12,529 11,160 12,985 11,135 12,920

Ending Stocks 1,624 1,673 1,708 1,128 987 736 1,713 759 2,004

Stocks/Usage 12.8% 13.9% 13.1% 8.6% 0 6.6% 13.2% 6.8% 15.5%

US Soybean Supply & Demand

(Mln acres/Mln bu.) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)

Beginning Stocks 574 205 138 151 215 169 124 169 125

Area Harvested 64.7 75.7 77.5 78.5 75.0 77.2 78.0 76.1 76.2

Yield 41.73 39.73 43.98 43.5 41.9 39.62 42.50 39.62 44.49

Production 2,677 2,967 3,359 3,329 3,094 3,015 3,269 3,015 3,390

Imports 10 13 15 14 16 20 15 20 15

Total Supply 3,261 3,185 3,512 3,495 3,325 3,204 3,408 3,204 3,530

Exports 1,159 1,279 1,499 1,501 1,362 1,345 1,435 1,350 1,450

Crush 1,803 1,662 1,752 1,648 1,703 1,620 1,680 1,635 1,695

Seed/Feed/Residual 94 106 110 131 90 115 93 95 119

Domestic Consumption 1,897 1,768 1,862 1,779 1,793 1,735 1,773 1,730 1,814

Total Usage 3,056 3,047 3,361 3,279 3,155 3,080 3,208 3,080 3,264

Surplus/Deficit ‐369 ‐67 13 64 ‐46 ‐45 76 ‐45 141

Ending Stocks 205 138 151 215 169 124 200 125 265

Stocks/Usage 6.7% 4.5% 4.5% 6.6% 5.4% 4.0% 6.3% 4.0% 8.1%

US Wheat Supply & Demand (Mln acres/Mln bu.) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)

Beginning Stocks 456 306 656 976 863 743 694 743 731

Area Harvested 51.0 55.7 49.9 47.6 45.7 49.0 46.7 49 47

Yield 40.2 44.9 44.5 46.4 43.8 46.3 43.9 46 44

Production 2,051 2,499 2,218 2,207 1,999 2,269 2,050 2,269 2,057

Imports 113 127 119 97 112 130 130 125 130

Total Supply 2,620 2,932 2,993 3,280 2,974 3,142 2,873 3,137 2,918

Exports 1,262 1,015 879 1,289 1,050 1,075 1,075 1,025 925

Feed Consumption 16 255 150 132 163 350 120 360 290

FSI Consumption 1,035 1,005 988 996 1,018 1,023 1,030 1,021 1,032


Total Usage 2,314 2,275 2,017 2,417 2,231 2,448 2,225 2,406 2,247

Surplus Deficit ‐150 351 318 ‐113 ‐120 ‐49 ‐45 ‐12 ‐60

Ending Stocks 306 656 976 863 743 694 648 731 671

Stocks/Usage 13.2% 28.9% 48.4% 35.7% 33.3% 28.3% 29.1% 30.4% 29.9%

US Cotton Supply & Demand (Mln acres/1000 Bales) 07/08 08/09 09/10 10/11 11/12 12/13(f) 13/14(f) 12/13(f) 13/14(f)


Area Harvested 10,490 7,569 7,529 10,700 9,462 4,250 3,428 3,793 3,399

Yield 878.9 812.7 777.0 812.2 789.9 4.0 4.1 4.6 4.1

Production 19,207 12,815 12,188 18,104 15,570 17,000 14,000 17,315 14,000

Imports 12 0 0 9 19 0 1 5 5

Total Supply 28,698 22,866 18,525 21,060 18,189 20,350 17,904 20,670 18,005

Exports 13,634 13,261 12,037 14,376 11,714 12,947 12,000 13,250 11,500

Loss 429 ‐273 ‐9 184 ‐172 0 0 20 5

Use 4,584 3,541 3,550 3,900 3,300 3,500 3,500 3,400 3,500

Total Usage 18,647 16,529 15,578 18,460 14,842 16,447 15,500 16,670 15,005

Net Trade 13,622 13,261 12,037 14,367 11,695 12,947 11,999 13,245 11,495

Surplus/Deficit 572 ‐3,714 ‐3,390 ‐347 747 553 ‐1,499 650 ‐1,000

Ending Stocks 10,051 6,337 2,947 2,600 3,347 3,903 2,404 4,000 3,000

Stocks/Usage 53.9% 38.3% 18.9% 14.1% 22.6% 23.7% 15.5% 24.0% 20.0%


Rabobank USDA

Rabobank

US Agri Commodity Balance Sheets

USDA

USDA

USDARabobank

Rabobank

May 2013 19

Source: Bloomberg, China General Administration of Customs *Preliminary

Soy oil Coffee Cotton

Sugar Pork Chicken

China's Agri Commodity Imports

Corn Wheat Rice

Soybeans* Edible Vegetable Oils Palm oil

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10/11 11/12 12/13

0

100

200

300

400

500

600

700


Thou

sand

ton

nes

10/11 11/12 12/13

0

10

20

30

40

50

60

70

80

90

100

Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

Thou

sand

ton

nes

2011 2012 2013

0

10

20

30

40

50

60

70


Thou

sand

ton

nes

2011 2012 2013

May 2013 20

* Includes futures and options

Speculator Net Length vs. ICE No.11 Sugar Speculator Net Length vs. ICE Coffee

Speculator Net Length vs. ICE Cocoa Speculator Net Length vs. ICE No.2 Cotton

Source: CFTC, Bloomberg, Rabobank

Speculator Net Length vs. CBOT Soybean Oil Speculator Net Length vs. CBOT Soybean Meal

Speculator Net Positions*

14-May-13

Speculator Net Length vs. CBOT Corn Speculator Net Length vs. CBOT Wheat

Speculator Net Length vs. KCBT Wheat Speculator Net Length vs. CBOT Soybean

200

400

600

800

1000

1200

1400

-80

-60

-40

-20

0

20

40

60

80

Oct 08 Apr 09 Oct 09 Apr 10 Oct 10 Apr 11 Oct 11 Apr 12 Oct 12 Apr 13

US

¢ /

bush

el

Tho

usan

d Co

ntra

cts

Speculator (Managed Money & Other Reportables) CBOT Wheat (RHS)

200

300

400

500

600

700

800

900

-100

0

100

200

300

400

500


US

¢ /

bush

el

Tho

usa

nd C

ontr

acts

Speculator (Managed Money & Other Reportable) CBOT Corn (RHS)

200

400

600

800

1000

1200

1400

-10

0

10

20

30

40

50

60

70

80

90


US

¢ /

bush

el

Tho

usa

nd C

ontr

acts

Speculator (Managed Money & Other Reportables) KCBT Wheat (RHS)

200

400

600

800

1000

1200

1400

1600

1800

2000

-100

-50

0

50

100

150

200

250

300


US

¢ /

bus

hel

Thou

sand

Con

trac

tsSpeculator (Managed Money & Other Reportables) CBOT Soybeans (RHS)

0

10

20

30

40

50

60

70

80

-80

-60

-40

-20

0

20

40

60

80

100


US¢

/ l

b

Thou

san

d C

ontr

act

s

Speculator (Managed Money & Other Reportables) CBOT Soybean Oil (RHS)

0

100

200

300

400

500

600

-60

-40

-20

0

20

40

60

80

100

120


US

¢ /

lb

Tho

usa

nd C

ont

ract

s

Speculator (Managed Money & Other Reportables) CBOT Soybean Meall (RHS)

0

5

10

15

20

25

30

35

40

-50

0

50

100

150

200

250


US¢

/ l

b

Tho

usa

nd C

ontr

act

s

Speculators (Managed Money & Other Reportable) ICE NY No. 11 Sugar (RHS)

60

110

160

210

260

310

360

-40

-30

-20

-10

0

10

20

30

40

50

60

70


US¢

/ lb

Thou

sand

Con

trac

ts

Speculators (Managed Money & Other Reportables) ICE Coffee (RHS)

200

700

1200

1700

2200

2700

3200

3700

4200

-30

-20

-10

0

10

20

30

40

50

60

70


US

$ /

To

nne

Tho

usa

nd C

ont

ract

s

Speculators (Managed Money & Other Reportables) ICE Cocoa (RHS)

0

50

100

150

200

250

-40

-20

0

20

40

60

80

100

120


US

¢ /

lb

Tho

usa

nd

Cont

ract

s

Speculators (Managed Money & Other Reportables) ICE Cotton (RHS)

May 2013 21

US Export Sales

Weekly US Corn Export Sales Weekly US Wheat Export Sales (All Wheat)


Weekly US Hard Red Winter Wheat Export Sales Weekly US Hard Red Spring Wheat Export Sales

Weekly US Soft Red Winter Wheat Export Sales Weekly US Durum Wheat Export Sales

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

Millio

n to

nnes

5 Yr. Range 5 Yr. Average Sales 11/12 Sales 12/13 Sales

-0.5

0.0

0.5

1.0

1.5

2.0

Millio

n to

nnes


-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

1.2

Millio

n to

nnes


-100

0

100

200

300

400

500

600

Thou

sand

ton

nes


-100

0

100

200

300

400

500

600

Thou

sand

ton

nes


-50

0

50

100

150

Thou

sand

ton

nes


May 2013 22

US & EU Export Sales

Weekly US Soybean Export Sales Weekly US Soybean Meal Export Sales

Weekly US Soybean Oil Export Sales Weekly US Cotton Export Sales

Weekly EU Wheat Export Licenses Weekly EU Barley Export Licenses

Source: USDA, EU Commission, Rabobank

-0.5

0.0

0.5

1.0

1.5

2.0

Millio

n to

nnes


-100

0

100

200

300

400

500

Thou

sand

ton

nes


-50

-30

-10

10

30

50

70

90

110

130

150

Thou

sand

ton

nes


-600

-400

-200

0

200

400

600

800

1,000

Thou

sand

bal

es


0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

Millio

n to

nnes

5 Yr. Range 5 Yr. Average Sales 11/12 12/13 Export Licences

0

50

100

150

200

250

300

Thou

sand

ton

nes

5 Yr. Range 5 Yr. Average 11/12 12/13 Sales

May 2013 23

Source: Bloomberg, USDA, Rabobank

Livestock Datapoints

US Broilers Placed for Meat US Eggs Set in Incubators US Cattle on Feed

US Marketings of Fed Cattle US Placements in Feedlots US Hogs and Pigs Inventory

US Pigs Kept for Breeding Brazil Poultry Exports Brazil Beef Exports

US Chicken-to-Corn Price Ratio Historic Cattle Crush Forward Hog Crush

145

150

155

160

165

170

175

180


Thou

sand

chi

cks

2011 2012 2013

175

180

185

190

195

200

205

210

215


Thou

sand

eggs

2011 2012 2013

10

11

11

12

12

13


Mill

ion

head

2011 2012 2013

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2


Mill

ion

head

2011 2012 2013

1.4

1.6

1.8

2.0

2.2

2.4

2.6


Mill

ion

head

2011 2012 2013

61

62

63

64

65

66

67

68

69

Q1 Q2 Q3 Q4

Mill

ion

head

2011 2012 2013

5,740

5,760

5,780

5,800

5,820

5,840

5,860

5,880

Q1 Q2 Q3 Q4

Thou

sand

hea

d

2011 2012 2013

240

260

280

300

320

340

360


Thou

sand

ton

nes

2011 2012 2013

45

55

65

75

85

95

105


Thou

sand

ton

nes

2011 2012 2013

4

6

8

10

12

14

16

18

20

75

80

85

90

95

100

105

2008 2009 2010 2011 2012 2013

USd

/lb.

Georgia Dock Whole Bird Chicken-to-corn price ratio (RHS)

-250

-200

-150

-100

-50

0

50

1 7 13 19 25 31 37 43 49

USD

/hd

2010/11 2011/12 2012/130

10

20

30

40

50

60

SellingPlacement

Jul-13Feb-13

Oct-13May-13

Jan-14Aug-13

Apr-14Nov-13

Jul-14Feb-14

USD

/hd

May 2013 24

Derivative Markets As of: 23-May-2013

Volatility

Current Close Prev. Mth. Net Chg. Percent Chg. Net Chg. Percent Chg. 90D Historical 1 Mth. Chg. 3 Mth. Implied 1 Mth. Chg. 12 Mth Avg. Impl

12 Mth High Impl.

12 Mth Low Impl.

Grains & Oilseeds

CBOT Wheat US¢/bu 692.75 697.50 -4.8 -0.7% -85.25 -11.0% CBOT Wheat 25.4 1.0 27.5 -0.0 29.2 47.6 21.8

KCBT Wheat US¢/bu 747.00 737.25 9.8 1.3% -84.00 -10.1% KCBT Wheat 24.5 1.9 24.8 0.1 27.4 38.6 21.5

MGE Wheat US¢/bu 808.00 815.25 -7.3 -0.9% -57.50 -6.6% MGE Wheat 20.8 3.1 23.3 0.6 25.3 43.8 18.5

Matif Wheat EUR/t 206.25 241.00 -34.8 -14.4% -44.00 -17.6% Matif Wheat 32.1 13.9 22.7 2.6 23.3 38.3 17.3

CBOT Corn US¢/bu 655.75 638.50 17.3 2.7% -42.50 -6.1% CBOT Corn 31.6 7.5 30.8 2.8 27.9 41.9 19.9

CBOT Soybeans US¢/bu 1,495.00 1,419.75 75.3 5.3% 76.25 5.4% CBOT Soybeans 22.7 3.6 20.7 -0.6 22.8 37.2 17.9

CBOT Soybean Meal USD/st 439.40 411.70 27.7 6.7% 18.80 4.5% CBOT Soybean Meal 31.2 7.9 23.8 0.3 25.1 39.9 20.4

CBOT Soybean Oil USD/lb 49.40 48.57 0.8 1.7% 0.24 0.5% CBOT Soybean Oil 14.6 -2.6 17.4 -0.9 19.5 24.7 16.2

MDEX Palm Oil MYR/t 2,340.00 2,265.00 75.0 3.3% 20.00 0.9% MDEX Palm Oil 18.0 -4.1 - - - - - - - - - -

Matif Rapeseed EUR/t 433.50 482.00 -48.5 -10.1% -22.75 -5.0% Matif Rapeseed 23.3 7.1 16.0 1.8 16.1 21.8 21.8

ICE Canada Canola CAD/t 645.20 639.60 5.6 0.9% 43.40 7.2% ICE Canada Canola 16.1 -1.2 15.7 2.1 15.7 20.5 12.9

Softs

ICE NY No. 11 SugarUS¢/lb 16.66 17.74 -1.1 -6.1% -2.85 -14.6% ICE NY No. 11 Sugar 18.5 -1.5 17.5 -1.1 23.3 31.5 17.6

Liffe No. 5 Sugar USD/t 471.60 504.20 -32.6 -6.5% -52.10 -9.9% Liffe No. 5 Sugar 15.7 -1.6 17.9 -1.3 19.1 22.9 15.2

ICE NY Coffee US¢/lb 128.20 137.55 -9.4 -6.8% -15.60 -10.8% ICE NY Coffee 24.2 -4.1 27.5 -0.4 28.7 36.7 22.3

BM&F Arabica USD/60kg ba 153.05 166.50 -13.5 -8.1% -30.15 -16.5% BM&F Arabica 24.8 -0.0 35.6 2.7 33.3 51.7 22.7

Liffe Robusta Coffee USD/t 1,960.00 1,979.00 -19.0 -1.0% -3.00 -0.2% Liffe Robusta Coffee 16.2 -0.2 19.4 -1.5 24.3 32.9 18.1

ICE NY Cocoa USD/t 2,315.00 2,316.00 -1.0 0.0% 79.00 3.5% ICE NY Cocoa 19.4 -0.7 23.4 -0.7 27.4 37.1 21.0

Liffe Cocoa GBP/t 1,563.00 1,551.00 12.0 0.8% 128.00 8.9% Liffe Cocoa 18.3 1.0 21.6 -0.4 26.4 34.9 20.0

ICE NY No. 2 Cotton US¢/lb 83.40 82.68 0.7 0.9% 8.26 11.0% ICE NY No. 2 Cotton 21.6 3.2 22.7 0.4 25.2 34.1 19.4

Livestock

CME Live Cattle US¢/lb 120.05 126.20 -6.2 -4.9% -9.85 -7.6% CME Live Cattle 13.7 2.0 10.7 11.7 15.1 9.2

CME Feeder Cattle US¢/lb 131.60 133.75 -2.2 -1.6% -19.80 -13.1% CME Feeder Cattle 19.1 2.7 11.5 -1.9 12.3 20.7 9.9

CME Lean Hogs US¢/lb 94.35 87.83 6.5 7.4% 8.62 10.1% CME Lean Hogs 16.7 -1.1 14.9 -2.5 18.0 24.2 14.2

Cash MarketsLast Update Price 1 Wk Chg. 1 Mth Chg. 12 Mth Chg. YTD Chg. Last Update Price 1 Wk Chg. 1 Mth Chg. 12 Mth Chg. YTD Chg.

Milling Wheat Soybeans

22/05/2013 7.59 0.2 -0.05 0.32 -0.92 US (FOB Gulf USD/t) 17/05/2013 593 18.2 26 41 -6

22/05/2013 8.64 0.0 0.27 0.92 -0.47 Argentina (FOB USD/t) 17/05/2013 518 16.8 -6 116 -86

05/09/2012 9.65 -0.3 -0.25 -0.68 -0.23 Brazil (FOB USD/t) 17/05/2013 527 19.2 14 -29 -13

10/05/2013 267 0.0 -1 3 -83 Soybean Meal

22/05/2013 308 -8.0 -16 16 -33 US Hi Pro (FOB USD/ton) 22/05/2013 483 24.1 54 78 46

17/05/2013 238 -8.0 -19 10 -26 Argentina Hi Pro (FOB USD/t) 21/05/2013 522 36.0 48 51 -14

Feed Wheat/Barley Dutch 44-47% (FOB Rot. USD/t) 22/05/2013 535 13.0 38 39 -29

22/05/2013 203.10 -3.0 -23.07 -12.00 -45.42 Vegetable Oils

11/01/2011 260.00 0.0 10.00 89.00 0.00 US Soybean Oil (FOB US¢/lb) 22/05/2013 0.0 -49.6 -48.9 -49.5 -46.2

Corn Brz. Soybean Oil (FOB USD/t) 22/05/2013 992 -3.3 -9 -138 -118

22/05/2013 7.63 0.2 0.55 0.89 0.10 Arg. Soybean Oil (FOB USD/t) 22/05/2013 0 -995.4 -1,001 -1,130 -1,106

17/05/2013 258 3.9 14 4 -24 Soybean Oil (CIF Rot. EUR/t) 22/05/2013 834 -3.0 10 -116 -28

Sugar Rapeseed Oil (CIF Rot. EUR/t) 15/05/2013 855 10.0 -5 -97 -45

18/01/2013 403.8 -3.3 3.5 -144.0 -15.0 CPO (CIF Rot. USD/t) 13/05/2013 855 37.5 18 -258 45

18/01/2013 487.3 -6.5 -4.3 -168.8 -12.5 Mal. CPO (FOB USD/t) 22/05/2013 803 7.5 30 -223 23

18/01/2013 433.8 -2.3 4.5 -150.0 -14.0 Coffee

23/05/2013 3,238 -5.0 -42 107 -208 ICO Coffee Indicator (US¢/lb) 22/05/2013 123.3 -6.5 -9.5 -35.6 -6.1

23/05/2013 3,003 13.0 20 153 -202 Colombian Milds (US¢/lb) 22/05/2013 152.4 -9.3 -13.7 -55.2 -8.7

Cocoa Brazilian Naturals (US¢/lb) 22/05/2013 124.8 -8.5 -11.7 -49.2 -13.0

22/05/2013 2,333 -33.3 1 67 41 Vietnam Robusta (USD/t) 23/05/2013 2,204 -60.6 -67 -225 43

17/05/2013 2,450 -31.0 44 -124 -9 Cotton

17/05/2013 2,563 -30.0 52 -91 24 Cotlook A Index (US¢/lb) 17/05/2013 102.96 -1.9 1.93 8.71 11.52

17/05/2013 2,633 -30.0 42 -76 24 US Middling Avg. (US¢/lb 22/05/2013 91.57 -3.1 -2.55 11.18 8.14

Source: Bloomberg N.B.Cash market prices are indicative only and should not be considered as a reliable source of actual traded prices

Benchmark Agricultural Commodity Prices

World Whites (USD/t)

US SRW (CIF Gulf USD/bu)

US HRW (CIF Gulf USD/bu)

US DNS (CIF PNW USD/bu)

Russia #4 (FOB Novo. USD/t)

French 11% (FOB Rouen USD/t)

German B (CIF Hbg EUR/t)

Ghana (Del. NY USD/t)

Prices Month on Month Year-to-Date

CNF Black Sea (USD/t)

MCXSUGM Comdty

MCXSUGS Comdty

ICCO Cocoa Indicator (USD/t)

Indonesia (Del. NY USD/t)

Ivory Coast (Del. NY USD/t)

Rouen Feed Barley (FOB USD/t)

Ukraine Feed Wheat (USD/t)

US No. 2 (CIF Gulf USD/bu)

Argentine (FOB Up River USD/t)

World Raws (USD/t)

May 2013 25

Source: Bloomberg

CBOT Corn CBOT Wheat KCBT Wheat

Grains & Oilseed Futures Forward Curves

Liffe Wheat ICE Winnipeg Canola Matif Rapeseed

CBOT Soybeans CBOT Soybean Oil CBOT Soybean Meal

MGE Wheat Matif Wheat MDEX Palm Oil

500

550

600

650

700

750

US

¢ /

bu

Spot 1 Week Ago 1 Mth Ago

670

690

710

730

750

770

790

US

¢ /

bu


720

730

740

750

760

770

780

790

800

810

820

US

¢ /

bu


1,150

1,200

1,250

1,300

1,350

1,400

1,450

1,500

1,550

US

¢ /

bu


47.5

48.0

48.5

49.0

49.5

50.0U

S¢

/ lb


330

350

370

390

410

430

450

470

US

D /

ton


780

790

800

810

820

830

840

850

860

870

US

¢ /

bu


190

200

210

220

230

240

250

EUR

/ t

onn

e


2,250

2,270

2,290

2,310

2,330

2,350

2,370

2,390

2,410

MY

R /

ton

ne


160

165

170

175

180

185

190

195

200

205

GB

P /

ton

ne


490

510

530

550

570

590

610

630

650

670

CA

D /

ton

ne


390

400

410

420

430

440

450

460

470

480

EUR

/ t

onn

e


May 2013 26

Source: Bloomberg

Liffe Cocoa Liffe Coffee CME Live Cattle

CME Feeder Cattle CME Lean Hogs ICE NY Frozen Concnetrated Orange Juice

Softs & Livestock Futures Forward Curves

ICE NY Sugar ICE NY Coffee ICE NY Cocoa

Liffe Sugar BM&F Arabica Coffee ICE NY Cotton

16

17

18

19

20

21

US

¢ /

lb


130

135

140

145

150

155

160

165

170

US

¢ /

lb


2,250

2,270

2,290

2,310

2,330

2,350

2,370

2,390

US

D /

ton

ne


1,520

1,530

1,540

1,550

1,560

1,570

1,580

1,590

GB

P/t

onn

e


1,950

1,970

1,990

2,010

2,030

2,050

2,070

2,090

2,110

2,130

2,150

US

D /

ton

ne


118

120

122

124

126

128

130

US

¢ /

lb


130

135

140

145

150

155

US

¢ /

lb


75

77

79

81

83

85

87

89

91

93

95

US

¢/

lb


155

160

165

170

175

180

185U

SD

/ 6

0kg

bag


140

141

142

143

144

145

146

147

148

149

US

¢ /

lb


460

470

480

490

500

510

520

US

D /

ton

ne


81

82

83

84

85

86

87

US

¢ /

lb


May 2013 27

Source: Bloomberg

MGE Wheat Matif Wheat MDEX Palm Oil

Euronext Liffe Wheat ICE Winnipeg Canola Matif Rapeseed

Grains & Oilseed Spot Continuous Prices

CBOT Corn CBOT Wheat KCBT Wheat

CBOT Soybeans CBOT Soybean Oil CBOT Soybean Meal

620

640

660

680

700

720

740

760

780

800

US

¢ /

bu

CBOT Corn 20 Day Mov Avg. 50 Day mov Avg.

650

700

750

800

850

900

950

US

¢ /

bu

CBOT Wheat 20 Day Mov Avg. 50 Day Mov Avg.

700

750

800

850

900

950

US

¢ /

bu

KCBT Wheat 20 Day Mov Avg. 50 Day Mov Avg.

45

47

49

51

53

55

57U

S¢

/ lb

CBOT Soybean Oil 20 Day Mov Avg. 50 Day Mov Avg.

1,350

1,400

1,450

1,500

1,550

1,600

1,650

1,700

US

¢ /

bu

CBOT Soybeans 20 Day Mov Avg.50 Day Mov Avg.

375

395

415

435

455

475

495

515

535

US

D/t

on

CBOT Soybean Meal 20 Day Mov Avg. 50 Day Mov Avg.

750

800

850

900

950

1,000

US

¢ /

bu

MGE Wheat 20 Day Mov Avg. 50 Day Mov Avg.

200

210

220

230

240

250

260

270

280

290

EUR

/ to

nn

e

Matif Wheat 20 Day Mov Avg. 50 Day Mov Avg.

2,000

2,100

2,200

2,300

2,400

2,500

2,600

2,700

2,800

MY

R/

ton

ne

MDEX Palm Oil 20 Day Mov Avg. 50 Day Mov Avg.

170

180

190

200

210

220

230

GB

P/t

onn

e

Liffe Wheat 20 Day Mov Avg. 50 Day Mov Avg.

570

580

590

600

610

620

630

640

650

660

670

CA

D /

ton

ne

ICE Canola 20 Day Mov Avg. 50 Day Mov Avg.

400

420

440

460

480

500

520

EUR

/ t

onn

e

Matif Rapeseed 20 Day Mov Avg. 50 Day Mov Avg.

May 2013 28

Source: Bloomberg

Liffe Cocoa Liffe Coffee CME Live Cattle

CME Feeder Cattle CME Lean Hogs ICE NY Frozen Concnetrated Orange Juice

Softs & Livestock Spot Continuous Prices

ICE NY Sugar ICE NY Coffee ICE NY Cocoa

Liffe Sugar BM&F Arabica Coffee ICE NY Cotton

16

17

18

19

20

21

22

US

¢ /

lb

ICE NY No. 11 Sugar 20 Day Mov Avg. 50 Day mov Avg.

130

135

140

145

150

155

160

165

170

175

180

US

¢ /

lb

ICE NY Coffee 20 Day Mov Avg. 50 Day Mov Avg.

2,000

2,100

2,200

2,300

2,400

2,500

2,600

US

D/

ton

ne

ICE NY Cocoa 20 Day Mov Avg. 50 Day Mov Avg.

1,350

1,400

1,450

1,500

1,550

1,600

1,650

GB

P/

ton

ne

Liffe Cocoa 20 Day Mov Avg. 50 Day Mov Avg.

1,800

1,850

1,900

1,950

2,000

2,050

2,100

2,150

2,200

US

D/

ton

ne

Liffe Robusta Coffee 20 Day Mov Avg. 50 Day Mov Avg.

118

120

122

124

126

128

130

132

US

¢/l

b

CME Live Cattle 20 Day Mov Avg. 50 Day Mov Avg.

130

135

140

145

150

155

160

US

¢/l

b

CME Feeder Cattle 20 Day Mov Avg. 50 Day Mov Avg.

70

75

80

85

90

95

US

¢/l

b

CME Lean Hogs 20 Day Mov Avg. 50 Day Mov Avg.

100

110

120

130

140

150

160

US

¢ /

lb

ICE FCOJ 20 Day Mov Avg. 50 Day Mov Avg.

470

490

510

530

550

570

590

610

US

D/t

onn

e

Liffe No. 5 Sugar 20 Day Mov Avg. 50 Day Mov Avg.

68

73

78

83

88

93

98

US

¢ /

lb

ICE NY No. 2 Cotton 20 Day Mov Avg. 50 Day Mov Avg.

150

160

170

180

190

200

210

220

230U

SD

/60

kg b

ag

BM&F Arabica 20 Day Mov Avg. 50 Day Mov Avg.

May 2013 29

Food & Agribusiness Research and Advisory Agri Commodity Markets Research (ACMR): Luke Chandler―Global Head +44 20 7664 9676 [email protected] [email protected]

Contributing Analysts: Tracey Allen―Sydney, Australia [email protected]

Paula Savanti―Buenos Aires, Argentina [email protected]

Andy Duff―São Paulo, Brazil [email protected]

Guilherme Melo―São Paulo, Brazil [email protected]

Renato Rasmussen ―São Paulo, Brazil [email protected]

Pawan Kumar―Singapore [email protected]

Sterling Liddell―Saint Louis, USA [email protected]

www.rabotransact.com

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