Abundant supply on the back of excess production continues to weigh on grains and oilseed prices, although some disrupted weather has hit the market during the last six months.
We expect prices to trend higher on looming weather risk, El Nino weather, now forecast to arrive in the early spring, and cost inflation.
Low oil prices will reduce demand for grain and oilseeds for bio energy production and thus limit upside price potential.
We forecast the price on Matif milling wheat to average EUR196/MT and EUR205/MT and the price on CBOT soybeansto average USD1,073/bu and USD1,115/bu respectively.
Overall, our forecasts are close to or above the prices in the forward market and we therefore recommend consumers to hedge exposure in 2015 and 2016.
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