Analysts appear to have been caught out among this week's
grains corrections particularly by corn's retreat, with their forecasts for
soybean and wheat still suggesting scope for price declines.
Analysts at major commentators such as Australia & New
Zealand Bank, Societe Generale and Commerzbank raised quarter-average price
forecasts for all three of the commodities over the past month, according to
research by FocusEconomics.
The consensus forecast for Chicago soft red winter wheat
futures saw a particularly strong upgrade, of $0.22 a bushel from the previous
month, to a consensus of $4.91 a bushel for the October-to-December quarter.
'Likely to drift down'
However, this figure – calculated from estimates made ahead
of Wednesday's US Department of Agriculture Wasde crop report which sent
futures tumbling - remained below the level that investors were pricing in even
at the nadir of the post-Wasde selling.
The December contract stood at $5.39 a bushel in morning
deals on Friday.
Following their "dramatic increase", on worries over drought
in the northern US Plains, "prices are likely to drift down from their current
level going forward," FocusEconomics said.
"However, a dip in wheat output, mainly as a result of a
smaller planted area in the US and a drop in Australian wheat production
following a bumper harvest last summer, will keep a floor under prices."
For soybeans too, analysts, despite nudging their forecast for
the October-to-December quarter higher by $0.05 a bushel, left it, at $9.71 a
bushel, below the level that investors were pricing in even during the
November futures on Friday stood at $9.92 ¼ a bushel.
FocusEconomics flagged that world soybean "supply is still
outpacing demand", noting too "storage difficulties" in top importer China,
"Thousands of tonnes of soybeans lining the country's coast [are]
waiting to be discharged, due to a shortage of warehouses," FocusEconomics said.
"These present a downside risk to the evolution of prices."
'Increase in industrial
However, in corn, an upgrade of $0.07 a bushel to $4.09 a bushel
in the consensus price forecast for the October-to-December period contrasted
with the recent retreat in futures.
Chicago's December contract stood at $3.86 ¾ a bushel on Friday,
undermined by the USDA's failure in the Wasde to cut its forecast for the US
corn yield this year, as investors had expected.
Still, FocusEconomics said that "looking ahead, an increase
in the industrial use of the grain, especially in China and the US, should
drive prices up".
'Poor outlook for
Among soft commodities, by contrast, analysts trimmed price forecasts,
but to levels above those investors are factoring in.
In sugar, for instance, while the consensus price estimate
for the October-to-December period was cut by 1.5 cents per pound to 15.8 cents
per pound, that is comfortably above the 14.1 cents a pound the market is
pricing in to New York October futures.
"Prices should rise from their current depressed level, as a
poor outlook for profits encourages producers to shift away from sugar towards
other commodities," said FocusEconomics.
For cocoa, the forecast for fourth-quarter New York prices
to average $2,058 a tonne, while down $23 month on month, was above the $1,921 priced
into December futures.
'Uncertain supply outlook'
And in arabica coffee, the forecast for fourth-quarter
prices, at 147 cents a pound, was above the 135.30 cents a pound the market was
factoring in, although 7 cents down on the previous month's forecast.
"After the expected harvest season volatility eases, prices are
expected to move higher due to the longer-term supply outlook, which is still
uncertain following worldwide droughts and the possibility of shortages next