Price recovery for wheat 'unlikely' next year, Commerzbank says


Don't look for any significant price recovery in 2017, with supply remaining ample through next season, Commerzbank said.

But corn prices are seen a bit more resilient, as funds turn more bullish, while rapeseed is supported by tight supplies.

"The supply situation for many key agriculturals looks set to remain comfortable in 2017, meaning limited potential for prices to recover," Commerzbank said.

Heavy wheat production

Commerzbank said wheat markets were already subdued thanks to heavy production in the 2016-17 season.

"There is no sign as yet of any major problems when we look ahead to the next season either," the bank said.

"Conditions have been good so far, which points to another record crop next year."

And wheat demand prospects remain strong, despite uncertainty in Egypt, the top importer.

Price recovery 'unlikely'

"Overall, there are hardly any apparent risks to the global wheat supply over the next year now," Commerzbank said.

"Accordingly, any noticeable price recovery is unlikely. "

And funds are showing no sign of significantly rejigging their bearish position on wheat, Commerzbank said.

"Although short-term-oriented market participants recently reduced their previously record-high net short positions somewhat, they still appear very sceptical about the future performance of the wheat price."

Prices seen below the futures curve

Commerzbank forecast Chicago wheat prices at $4.10 a bushel over the last three months of 2017.

December 2017 Chicago wheat futures are currently trading at $4.61 a bushel.

And in Paris, the bank forecast wheat prices at E160 per ton in Paris over the October to December period of next year.  

December 2017 Paris wheat prices are trading at around E172.00 a bushel.

Ethanol blending supportive

But Commerzbank is more positive on the corn price outlook, although the bank's forecast is still a touch below the forward price curve.

Commerzbank said a reduction to US corn acreage "is likely to give the price a helping hand".

And the planned increased of the amount of ethanol that must be blended into gasoline will also be supportive, "assuming that it is not reversed by the government to come," Commerzbank said.

Funds see buying opportunity

And unlike in wheat, funds look more ready to shift their outlook in corn.

"The price slide has been exacerbated by short-term-oriented market participants, who have quickly reduced their net positions well into negative territory."

"Things are now beginning to turn around again, however," Commerzbank said.

"Clearly there are increasing numbers of investors who believe that prices have bottomed out at their current low level and see this as a good opportunity to buy."

Commerzbank forecast corn prices in Chicago at $3.80 a bushel over the last three months of 2017.

December Chicago wheat futures are trading at about $3.87 a bushel.

No shortage of soybeans

The bank was also bearish on soybean prices, despite rising Chinese imports.

Rising soybean acreage in the US means that if weather conditions are favourable, the next harvest could outstrip this year.

"Combined with the record-high South American crop, there is therefore likely to be ample supply available internationally to ensure that there is no shortage of soybeans in 2017," Commerzbank said.

The banks forecast soybean prices at $9.00 a bushel over the last three months of 2017.

November 2017 soybean futures are trading at around $10.29 a bushel.

Tight rapeseed market

But prospects for rapeseed in Europe were stronger.

"Whether 2017 will see EU production recover at last is thus very uncertain," the bank said.

"Rapeseed is likely to remain in tight supply in any case."

The bank forecast rapeseed prices at E390 a tonne over October to December 2017.

November Paris rapeseed futures are trading at around E391 a tonne.


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