London, Jan 20 - Agricultural commodities should perform strongly in 2009 with prices rebounding from the sharp losses of the last few months as demand proves resilient despite the economic downturn, Commerzbank said on Monday.
"We believe a medium term recovery in agricultural prices is likely, despite the gloomy outlook for the economy. After all, we still eat food, even in times of crisis," Commerzbank said in a report on the 2009 outlook.
The report noted there had been a sharp fall in prices in the last few months and prices were now back to the levels of mid 2006 or even lower.
"We believe this is merely a correction in an intact upward trend, largely due to the outflow of investments from the commodities sector and the strength of the U.S. dollar."
Commerzbank said corn should be the best performer, rising 50 percent by the end of the year to $6 a bushel as demand will remain robust.
"This forecast is predicated on the assumption that the economy will begin to improve during the year and oil prices will increase," the report said.
Corn is widely used in the U.S. to produce biofuel ethanol.
Wheat prices were seen rising to $7.30 per bushel by end of 2009, a rise of about 26 percent from Friday's close of $5.78-3/4 while soybeans <Sc1> were forecast to reach $12.00 per bushel, up 18 percent from Friday's close of $10.20.
Commerzbank noted raw sugar was one of the few commodities to close the past year at a plus, anticipating a further rise in prices this year.
"While the demand for sugar is growing strongly, supply is falling," the report said, forecasting an end-2009 raw sugar price of 14.00 cents a lb, up about 14 percent from Friday's settlement of 12.26 cents.
Arabica coffee prices and cocoa were both expected to climb nearly 20 percent to $1.35 per lb and $2,800 a tonne respectively.