Maize prices have been relatively stable over the past few months, but are likely to start rising again in 2013, a new forecast by Macquarie has warned.

US maize prices soared from about $650/bushel to $850/bushel in July but have been near the $750/bushel mark ever since [CBOT].

However, with the USDA expected to lower its forecast for the 2013/14 harvest area for maize in its January crop report, while demand for exports is tipped to increase and ethanol inventories are depleting, prices would be moving upwards in the new year, Macquarie predicted in its latest maize report.

“We believe harvest area will be much lower than the USDA’s current forecasts,” the bank said, adding that Brazilian and Ukrainian maize - which had previously kept a check on US maize prices - would become much less available during the early part of 2013. Therefore, people would have to turn back to the US for their supplies.

Winter hit the UK hard this week, so it is little surprise to see gas among the key risers in our latest tracker. Gas prices in the UK are up nearly 5% month-on-month and up 20.7% year-on-year, driven by higher demand for heating.

Orange juice concentrate has also crept into our tracker of the key rising commodities again, courtesy of a 5.1% month-on-month rise. Although the juice remains nearly 30% cheaper on a year-on-year basis, recent concerns about a winter freeze harming Floridian citrus crops have nudged prices higher.

At the opposite end of the spectrum, palm kernel oil prices in the EU have fallen by 6.1% as weaker demand combined with improved production in Malaysia put downward pressure on prices.

Macquarie also warned that sugar-based ethanol from Brazil, which had limited ethanol prices to date, would soon run out, and the focus would be squarely on corn-based ethanol production once again.

This shift would make it more difficult to ration demand for ethanol over the coming months “and thus be supportive of prices”, it said.

Macquarie expressed concern about the potential impact of higher-than-expected feed demand in the US on maize prices.

“At the height of the crisis in the US, we were hearing all the right anecdotal stories about the state of demand, piglets being given away for free and so on,” it said.

“The incremental data from the USDA in the last couple of months hasn’t been completely supportive of this story, though, so concern surrounds the size of this portion of the US demand,” the bank added.

Topics