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Soybeans in box seat for US acreage battle

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According to the latest Rabobank Agri Commodity Markets Research report, soybeans appear to have gained ground on corn and cotton this year in the annual battle for acreage in the US.

While the USDA is forecasting a record US corn crop in 2013, insured new crop prices suggest corn may lose some acreage to soybeans and spring wheat.

In the Grains & Oilseeds segment, CBOT wheat price forecasts are reduced due to lower wheat demand. Speculator net short positions have likely peaked while a rally in corn prices is expected to support wheat prices in Q2. Additionally, expanded US spring wheat planted area is likely to offset some of the forecast decline in winter wheat production.

CBOT corn prices are expected to rally in Q2 2013 on low US corn stocks. The March 28 Grain Stocks report is expected to be bullish for CBOT corn prices. Though the demand for old crop US corn is increasing, US corn production in 2013/14 is forecast to be significantly below initial USDA estimates.

Rabobank’s Q2 price forecast for soybeans is raised with lower prices expected by Q4 due to record US plantings. A reduced outlook for Argentina’s soybean crop will limit global soybean exports for 2012/13 while higher US plantings are likely to allow prices to ease by the end of 2013.

Q2 price forecast for palm oil is slightly lower on slow export demand but above spot. Malaysia’s palm oil stocks are still historically high but are forecast to decline on reduced production. Imports to China and India are likely to slow in the coming months.

Among other commodities, higher prices for sugar are forecast as the Brazilian crush begins. However, further selling by Thai and Brazilian producers will continue to cap rallies. Short liquidation by speculators and continued end user buying will support prices.

Price forecasts for coffee have moved higher as bullish developments encourage speculator and industry buying. Arabica price outlook is positive as disease concerns and frost worries will result in short covering. Less supply and talk of drought in Vietnam will support Robusta prices.

Weakness in the cocoa market is likely to continue in the short term on origin hedging but medium term risks appear undervalued. Outlook in 2H 2013 is supportive as fundamentals tighten on flat output.

Cotton price forecasts have been revised upwards to reflect strong import demand. Price outlook will depend on the pace of the Chinese imports program. Market trading above fair value at front of curve, and a non-commercial-led selloff in June is expected in this segment.

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