April 3, 2012

CBOT soy futures forecasts up

Citing a smaller-than-expected projection for US 2012 soy plantings from the USDA, Goldman Sachs said it had raised its price forecasts for Chicago Board of Trade soy futures.

The investment bank lowered its price forecasts for cotton, responding to a larger-than-expected cotton seeding forecast from the USDA.

Goldman said in a research noted dated March 30 that it had raised its three-, six- and 12-month price forecasts for CBOT soy futures to US$14.30 per bushel, from US$12.90 per bushel previously, for all three time periods.

"Our long-held view has been that new-crop soy prices needed to outperform corn prices to incentivise sufficient planting in the US," Goldman said in a note to clients.

The USDA's projection, released on Friday (Mar 30), for US soy plantings at 73.9 million acres (29.9 million hectares) "suggests that new-crop soy prices will need to rally ... to secure this acreage and avoid critically low 2012/13 US soy ending stocks," Goldman said.

However, the bank cautioned that the USDA's report may have underestimated total planted acreage and in turn soy acreage.

Goldman also said the USDA's report, based on a survey conducted in early March, did not capture the rise in CBOT soy prices relative to corn later that month -- a shift that may change farmers' final planting decisions.

For cotton, the bank lowered its six- and 12-month price forecasts for New York futures to US$0.80 and US$0.70 per pound, respectively, from US$0.85 previously for both time periods. Goldman's three-month cotton forecast stayed unchanged at US$0.90.

Goldman left its three-month price forecast for CBOT corn unchanged at US$6.90 a bushel. Goldman's six-month corn price rolled to US$5.25, from US$6.90 previously, as the bank shifted its forecasts forward into the new-crop time period. The bank left its 12-month corn forecast unchanged at US$5.25 a bushel.

Similarly for CBOT wheat, Goldman left its three-month price forecast unchanged at US$6.80 a bushel while rolling its six-month forecast to US$5.75, from US$6.80 previously. Goldman's 12-month wheat price forecast remained unchanged at US$5.75.