The Food and Agricultural Organization of the United Nations estimates world cereal production in 2014 to set a new record of 2,532 million tonnes, about 10 mt higher than November’s forecast and seven mt (0.3 per cent) above last year’s peak.
“As we have visibility for the first half of 2015, we assume agri commodities’ prices to remain volatile, with an upward bias. But, prices in the second half would largely depend upon the quantum and timeliness of the southwest monsoon rainfall. Therefore, forecasting of agri commodities prices for the second half of 2015, as of now, would be a bit early,” said Naveen Mathur, associate director, Angel Broking.
Cotton prices are likely to remain subdued in 2015, as China’s import demand is projected to get slower by the highest proportion since 2008-09. By contrast, both wheat and sugar would strengthen after finding a base in early 2015, as supply risk persists.
Overall, agri commodities’ prices in 2015 are expected to trend lower, following improved supply. The wide price swings of previous seasons are not expected to be as pronounced in the year ahead, as stock levels have improved. However, analysts believe the commodity markets will still remain volatile in 2015, as stocks are not yet at levels to buffer a significant supply or demand shock.