Ag market commentators have lifted expectations
for corn and soybean prices, and see prospects for a revival in sugar futures -
but have lost optimism over cocoa and wheat price recoveries.
The consensus corn price forecast, as measured by commentators
monitored by FocusEconomics, rose by $0.09 a bushel month on month to reach
$4.02 a bushel, as measured on a quarter-average basis for the October-to-December
Corn futures "are expected to rise further on the back of
projections of lower global inventories in the short-and medium-term and a
weaker harvest in the US", said FocusEconomics, whose data are gleaned from the
likes of Australia & New Zealand Bank, Capital Economics and Euromonitor.
In fact, the upgraded forecast was in line with the price
that December corn futures were trading in Chicago on Wednesday, after gains during
the last week attributed to concerns over dryness in the western US Corn Belt,
and the surge in wheat futures from drought in the northern US.
'Prices should rise'
However, upgrades of $0.08 a bushel, to $9.66 a bushel, to
the consensus forecast for soybean prices for the October-to-December period -
while taking the estimate for values in the last three months of 2018 above $10
a bushel – remain comfortably above the futures curve.
November 2017 futures were trading on Wednesday at $9.43 ¾ a
bushel, and those for November 2018 at $9.50 ¾ a bushel.
"Prices should rise this year thanks to robust demand and stagnant
global production," said FocusEconomics, noting "still-buoyant demand from
China", the top soybean-importing country.
'Net short is
Commentators are upbeat on prospects for a recovery in New
York raw sugar futures too – with the consensus price forecast, while down 0.6
cents a pound to 17.4 cents a pound for the last three months of this year,
still well above the 13.79 cents a pound at which October futures are valued
"Sugar prices have taken a pummelling over the last month, largely
due to Brazil's decision to cut the price of gasoline, which could encourage
producers to divert more cane to sugar production rather than to ethanol,"
Indeed, data on Tuesday on sugar output in Brazil's key
Centre South region extended a run of statistics showing greater-than-expected sugar
However, there are also ideas among investors that values
could see upward pressure, as a long spell of selling by hedge funds, which has
driven them to an unusual net short in sugar futures and options, potentially
goes into reverse.
The sugar desk at London broker Marex Spectron said this week that "the consumers of sugar
almost never buy forward, while the producers always sell forward, so it is
logical that in normal circumstances, the funds should always be net long, as
counterpart to the producers.
"Therefore their current net short is abnormal," as borne
out by historical trends.
Wheat, cocoa caution
However, the consensus on wheat price prospects appears
bearish, with commentators sticking with a forecast of prices ending this year
at a little under $4.70 a bushel, even as December futures have bounced, on
Wednesday touching $4.87 a bushel.
The forecast for prices at the close of next year, kept at $4.82
a bushel, was even further behind the futures curve, with December 2018 futures
trading at $5.45 ½ a bushel.
And commentators lost some optimism over a rebound in cocoa
prices, cutting their forecast for prices in the last three months of this year
by $67 a tonne to $2,081 a tonne, in line with the futures curve.
In the last quarter of next year, New York cocoa futures are
forecast averaging $2,123 a tonne, a downgrade of $62 a tonne, and below the
$2,172 priced in by the December 2018 contract.