Palm Oil to Be Top Agriculture Gainer in 2013, Rabobank Says

(Businessweek) – Palm oil may be the best-performing agricultural commodity in 2013 as demand rebounds after this year’s price plunge, Rabobank International said today in its annual outlook report.

Palm oil may trade at 2,700 ringgit ($884) a metric ton by the fourth quarter of 2013 on the Malaysia Derivatives Exchange, compared with an expected average of 2,360 ringgit this quarter, analysts led by Luke Chandler said in the e-mailed report. The bank expects coffee, soybean oil and cocoa to have the best returns next year, after palm oil, while soybean meal may be the worst performer, followed by wheat, corn and soybeans.

Palm oil prices are expected to rise as inventories decline from record levels and demand increases from importers including China and India, the bank said. The commodity has tumbled 25 percent this year after stockpiles surged in Indonesia and Malaysia, the two largest producers.

“We expect stock levels to decline in early 2013 as production slows seasonally and palm oil’s price discount relative to alternative vegetable oils encourages end-user buying,” Rabobank said.

Agricultural commodities overall may decline 10 percent next year, with grain and oilseed prices rising in the first quarter before falling the remainder of the year, Rabobank said. Soybean meal prices may drop to $350 for 2,000 pounds in the fourth quarter of 2013, compared with an average $450 this quarter, it said.

Arabica Coffee

Wheat may drop to $7 a bushel by the end of next year, while corn may be $6 a bushel and soybeans may reach $13 a bushel, the bank said. That compares with projections for this quarter at $8.70 a bushel for wheat, $7.40 for corn and $14.50 for soybeans.

Rabobank projected arabica coffee prices at $1.70 a pound in the fourth quarter of next year, while soybean oil may be 49 cents a pound and cocoa may be $2,550 a metric ton in New York. That compares with this quarter’s outlook for coffee at $1.55 a pound, soybean oil at 48 cents a pound and cocoa at $2,450 a ton.

To contact the reporter on this story: Whitney McFerron in London at  wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at  ccarpenter2@bloomberg.net