Rabobank cut its price forecasts for a range of ag commodities – from corn to, especially, robusta coffee – but remained largely more sanguine than investors, foreseeing cotton and sugar among most bullish bets.

The bank - which in December in its 2016 outlook forecast ag prices improving "slightly", but remaining below early-decade highs – trimmed further its ambitions for values this year.

"Weak energy prices, lower growth prospects in the Chinese economy and the depreciation of the Argentine peso all paint a bleaker outlook for many agri commodities than anticipated last year," the bank said.

'Stocks will cap rallies'

For Chicago wheat, it downgraded it quarterly price forecasts by up to $0.15 a bushel, ditching ideas of prices moving much above $5 a bushel, saying "record high stocks… will cap rallies".

US wheat production this year would, on a trend yield basis, increase from 1.37bn bushels to more than 1.4bn bushels despite the sharp drop in sowings of winter crop, although India's dryness-hit harvest does look like suffering a "substantial decline", of 7% to 90m tonnes.

For soybeans, Rabobank trimmed its price forecasts by up to $0.10 per bushel, giving up on ideas of futures returning above $9 a bushel this year, thanks to "abundant" supplies and the prospect of another strong US harvest, given the likelihood of the oilseed picking up some area lost to winter wheat.

And in corn, the bank ditched expectations of a return above $4.00 a bushel, citing "lacklustre US exports[and] prospects of good South American crops", while adding that futures in the grain, which is used largely to make ethanol, "are not immune to the general pressure from low crude oil prices".

Robusta price gains ahead?

However, the biggest downgrade was for London-traded robusta coffee futures prices, for which Rabobank cut its forecasts by up to $240 a tonne, now seeing values averaging $1,480 a tonne for the current quarter.

Even so, it was more optimistic than the market, which is pricing in $1,416 a tonne for March delivery, and with an estimate of futures averaging $1,560 a tonne in the April-to-June quarter well above the $1,441 a tonne the May lot was trading at on Wednesday.

Terming a 9% drop in robusta futures so far in 2016 somewhat "surprising", Rabobank said that the jump in stocks in Vietnam, the top producer, which many have blamed for the drop in values, was "not a secret to anybody".

Ranobank added: "Our view is that if Vietnamese farmers did not like the price for last season, they will certainly not like it now."

And while growers may be selling robusta beans "normally for the time being, they are likely to go shy after Tet in the second week of February".

'Barrier to entry'

And for New York-traded cotton, the bank cut its price forecast too, by up to 3 cents a pound, but retaining its estimates well above the futures curve.

It, for instance, saw cotton prices ending 2016 at about 68 cents a pound, well above the 61.52 cents a pound that December futures were factoring in, with the optimism reflecting a more downbeat expectation for US sowings than many other commentators are foreseeing.

While the trade is estimating a 13% jump in US cotton plantings this year to 9.7m acres, according to a Reuters forecast, Rabobank forecasts a 2% drop in area.

While acknowledging the enhanced appeal of the fibre, thanks to "strong" gin rebates of up to $0.15 a pound above base grade, many farmers may be put off getting into cotton by the cost of harvesting equipment.

The "heavy capital outlay of up to $600,000" for a round module maker "presents a barrier to entry for many farmers to grow cotton again".

Sweet on sugar

For New York-traded raw sugar, price estimates were maintained at levels well above those investors are factoring in.

Futures were, for instance, seen closing 2016 at about 15.5 cents a pound, compared with the 13.76 cents a pound the March 2017 contract was trading at.

"El Nino related production downgrades are materialised in Asia and, coupled with firm demand, continue to provide support for international sugar prices," the bank said, flagging the prospect of weaker output in the likes of India and Thailand.

"Chinese import demand… will remain a feature as local stocks contract."