US corn prices may slip by 10%

US corn prices are poised for a fall of up to 10% within less than a month – but investors who hold on will be rewarded with prices higher even than today's levels, Societe Generale has said.

An influential report on June 30, in which the USDA will estimate American crop sowings this year, is "likely to be bearish" in showing a rise in expectations for corn plantings. The temptation for investors to sell may be heightened further on July 9, when the USDA unveils a monthly report on global crop supply and demand.

Analysts said that this will reflect the increased volume of corn plantings, and yields forecasts may also be revised slightly upwards.

The pressure from the reports may drag prices as low as US$3.20 a bushel by mid-July. Chicago's July lot stood at US$3.54 ½ a bushel on Tuesday morning, with the September lot at US$3.63 ¾ a bushel.

Meanwhile, analysts believe that it was likely to be followed by a clear bullish trend that could bring prices to above US$4 a bushel again by the end of the year. This rebound would be driven by a rise in hopes for feed use, as livestock farmers return to rebuilding herds and growing ethanol demand during America's summer driving season.

Furthermore, analysts noted that with yield forecasts at record levels, and based on favourable weather conditions, there will be increased risks of seeing downward revisions if the weather turns out to be less favourable than forecast.