November 11, 2011

US corn price forecast up

In response to strong domestic demand and the USDA's reduced estimate of US corn yield, Goldman Sachs increased its corn price forecast on Thursday (Nov 10).

In a research note, the investment bank also lowered its price forecasts for soy and made mixed changes to its wheat price forecasts.

For corn, Goldman raised its three-month price forecast to US$6.85 per bushel from US$6.15. The bank raised its six-month price forecast to US$6.50 from US$6.15, but left its 12-month corn price forecast unchanged at US$5.50.

USDA on Wednesday (Nov 9) lowered its estimate of the US 2011 corn yield to 146.7 bushels per acre, the lowest in eight years.

Goldman cited improving South American soy production prospects in cutting its soy price forecasts. The bank dropped its three-month soy price forecast to US$12.20 a bushel from US$12.60.

Goldman cut its six-month soy price forecast to US$12.50 from US$13.00 and its 12-month forecast to US$12.00 from US$13.00.

For wheat, Goldman raised its three-month price forecast to US$6.70 a bushel from US$6.40. It lowered its six-month wheat price forecast to US$6.40 a bushel from US$6.50 and lowered its 12-month forecast to US$5.90 from US$6.00.

The bank said it expected wheat to trade at a discount to corn in the near-term due to ample world supplies, but wheat should out-perform corn prices later in 2012.