Bank: Volatility in farm produce prices

Rabobank forecast volatility in agricultural commodity prices would continue in 2013, particularly in the grain and oilseeds markets, as a supply squeeze in the first six months was expected to push prices higher before an expected production rebound would lead to a weakening in prices in the second half of the year.

The bank says soymeal is the commodity likely to show the largest price decline by the end of 2013. Meanwhile, palm oil is expected to be the strongest performer, as Chinese imports and biofuel demand drive prices higher after a sell-off in 2012, the bank said in a report released on Tuesday.

China's palm oil imports were projected to reach a record 6.2 million metric tons in 2012/13, which will shore up the commodity price in the global market, the bank said.

This is partly driven by the declining supply of oilseed in the Chinese market. The country's demand for soybean was expected to increase 3.3 million tons from a year earlier but reduced production of Canadian rapeseed will lower imports, according to the bank.