February 3, 2012

US corn, soy, wheat price forecasts up

Forecasts for Chicago Board of Trade (CBOT) corn, soy and wheat prices have been raised, citing tight US inventories and smaller South American crops that could boost export demand for US grains, Goldman Sachs said.

The bank raised its three- and six-month price forecasts for corn to US$6.90 per bushel, from US$6.30 previously.

However, Goldman left its 12-month corn forecast unchanged at US$5.25, citing an expected rise in US 2012/13 corn plantings that should replenish supplies. Goldman projected US 2012 corn seedings at 94.5 million acres, up from the USDA's 2011 figure of 91.9 million.

Corn prices "have sufficiently outperformed other crops and the rise in input costs to offer once again the best potential return per planted acre under average weather conditions," the bank said in a research note.

Goldman raised its three-, six-and 12-month price forecasts for CBOT soy to US$12.90 per bushel, from US$12.15 previously. The bank projected 2011/12 soy production in Brazil at 70 million tonnes, below USDA's current forecast of 74 million. Goldman pegged Argentine 2011/12 soy production at 45 million tonnes, below USDA's forecast of 50.5 million.

"We believe that the prospects for limited acreage gains and stronger exports in the face of lower South American production will put the new crop US soy balance into deficit and support soy prices relative to corn prices over the medium term," Goldman said.

The bank projected US soy plantings for 2012 at 75.5 million acres, up from 75 million in 2012.

Goldman said it had not changed its outlook on wheat but nonetheless raised its three- and six-month CBOT wheat price forecasts to US$6.80 per bushel, from US$6.20, following its expectations for higher corn prices.

Goldman left its 12-month forecast for wheat unchanged at US$5.75 a bushel. The bank forecast US all-wheat plantings for 2012 at 58.0 million acres, up from 54.4 million in 2011.