Investment bank Goldman Sachs said on Monday it expected corn and wheat prices to outperform soyabean prices over the next few months due to bigger-than-expected US soyabean supplies reported by the government last week. Goldman said in a research note to clients that it lowered its three- and six-month soyabean price forecasts to $18.75 and $17.25 a bushel, respectively, from its previous outlook for $20 and $18.
The bank kept its three- and six-month corn price forecasts unchanged at $9 and $8.25, while raising its Chicago wheat price outlook. It increased its three-month wheat price forecast to $10.25 from $9.80, and its six-month forecast to $9.50 from $8.75. "We expect corn and wheat prices to outperform soyabean prices in the near term and into the October WASDE (World Agricultural Supply & Demand Estimates) release as we expect it to feature lower 2012/13 US corn and global wheat production and in turn higher new-crop US soyabean production," Goldman said.
The US Department of Agriculture on Friday reported that US farmers and commercial grain firms held 169 million bushels of soyabeans on September 1, almost 40 million more than most traders expected. The bigger supply reflected the government's raising its US 2011 soya harvest estimate by 37.5 million bushels to 3.09 billion bushels.
"Wheat prices will need to maintain a higher premium to corn prices to limit feed demand in the face of lower US and global inventories," Goldman said. "In particular, another crop failure would likely push wheat prices sharply higher to limit animal feed demand in the face of inelastic human food demand." The next USDA crop report is due October 11.
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