Citi Raises Grain Price Targets Amid Super El Niño Risks

Citi, a leading financial institution, has raised its price targets for key grain markets due to concerns about a strengthening Super El Niño event. The bank's revised forecasts reflect its assessment that current market prices underestimate the potential downside to global agricultural production.

The National Oceanic and Atmospheric Administration (NOAA) has assigned a greater than 90% probability of a very strong El Niño event for the October-December period, with a 69% chance it will surpass all events since 1950. Citi believes this poses significant risks to palm oil, robusta coffee, rice, sugar, cocoa, and Australian wheat.

The bank has increased its price forecasts for corn, soybeans, and wheat across both 3-month and 12-month horizons. The new targets are $5.40 per bushel for 3-month corn, $5.90 per bushel for 12-month corn, $12.75 per bushel for 3-month soybeans, and $13.25 per bushel for 12-month soybeans.

Citi notes that its 3-month soybean price forecast has been raised to $12.75 per bushel after the previous target had already been met. The bank emphasizes that a strong El Niño constitutes a significant threat to palm oil production in Indonesia and Malaysia, which could increase demand for soybean oil and support higher soybean prices.