China’s handling of its state reserves of raw materials such as cotton and sugar will be a key factor shaping the direction of agricultural commodities in 2017, according to a major lender to agribusinesses.
China is “the most striking wild card” that will drive agricultural markets, said Stefan Vogel, head of agri commodity markets at Rabobank, the Dutch lender that is a leading financier to farmers and agribusinesses around the world.
Any decision by China’s policymakers to begin selling down the country’s huge reserves would have a large impact on markets. “Whether China opens the stock floodgates or not will be a major price-driver in cotton and sugar — and potentially also in corn, soyabean or vegetable oil — markets in 2017,” the bank said in its report.