Commentators from Goldman Sachs to the University of
Illinois lined up to cast doubt on long-awaited forecasts in a benchmark US
report, fuelling a reversal in soybeans' gains of the last session.
The US Department of Agriculture on Thursday forecast a jump in US inventories of corn in 2012-13, helped by a yield upgraded to a record
166 bushels per acre, while soybean supplies were seen ending the season at their tightest in nearly half a century.
However, the extent of the supply shifts has attracted
increasing scepticism, notably over a yield forecast which the USDA has,
controversially, based on data excluding last year's disappointing 147.2-bushels-per-acre
"It is not clear why 2011 was not included in the trend
analysis of yields," Darrel Good, agricultural economist at the University of
Illinois, said, terming the USDA's forecast "very aggressive".
'Pretty darn optimistic'
Rabobank, flagging "significant uncertainty around yield expectations",
said that the last, and only, time a comparable yield was achieved was three
years ago when "harvested acreage was 11% lower, with less corn-on corn acreage
The expansion of US corn sowings a 75-year high, as measured
by farmers' initial intentions, has extended plantings into less productive
areas of the US, and involved successive corn sowings which are usually significantly
less productive than when the grain is rotated with other crops.
At Teucrium Trading, a specialist in commodity-based
exchange traded funds, Sal Gilbertie said he was hearing from farmers who were
planting "corn on corn on corn" – three successive crops on the same fields.
"The USDA's yield number is pretty darn optimistic," Mr Gilbertie
'Downside to prices limited'
Goldman Sachs, also flagging the USDA's exclusion of 2011
yield data, said it was sticking with an estimate of 160 bushels an acre, and
by forecasts of Chicago's near-term corn contract standing at $6.80 a bushel in
three months' time – significantly above values implied by the current futures curve.
While acknowledging that the data "will likely weigh on corn
prices in the near term, we believe that further downside to prices from
current levels will be limited until we get a better idea of summer growing
conditions", Goldman said.
This outlook was echoed by Australia & New Zealand Bank
analyst Paul Deane who, saying the USDA had "set the bar high on expectations
for US corn yields", cautioned that such a result would require "benign July
temperatures in the Midwest and adequate soil moistures into August".
As such, "grain prices will likely remain supported for the
next four months", until such a benign outcome is ensured.
The comments helped corn futures post a relatively strong
performance in Chicago on Friday compared with soybeans, which retreated as
analysts questioned too the idea of US stocks of the oilseed falling to 145m
bushels as of end of 2012-13.
This figure reflects an estimate of sowings falling to 73.9m
acres, a figure taken from a survey of early planting intentions of farmers who
are seen likely to have expanded soybean seeding plans since, encouraged by
high prices of the oilseed.
"There is really nobody that feels that [73.9m-acre] number
is valid at this time," Darrell Holaday at Country Futures said.
"Look for that number to go to 75m-77m acres. An extra 2m
acres would add 80m bushels to total supply."
'Already upping production estimates'
At Minneapolis-based broker Benson Quinn Commodities, Kim
Rugel said: "The trade is already upping its soybean production estimates as
prospect for increased acres looms large, with winter wheat maturity and
harvest ahead of normal pace.
"Private analysts are
forecasting increases in planted acres in range from 1.5m-2.5m acres based on
increased double-crop soybeans."
An early wheat harvest boosts the opportunities for growers
to plant a follow-on soybean crop.
"The increase to acres cushions the US balance sheet and, if
US summer weather remains normal, the 2012-13 carryout of 145m bushels could be
lowest of the year."
Soybeans for July delivery, the best-traded contract, stood 0.9% lower at $14.42 ¾ a bushel in early live deals in Chicago, with the new crop November lot down 0.6% at $13.51 ¼ a bushel.
Corn for July was 0.3% lower at $5.86 a bushel, with the December lot falling in line to $5.06 a bushel.
A pattern of relatively firm grains compared with oilseeds was evident in Paris too, where rapeseed for November fell 0.7% to E469.75 a tonne, while November wheat gained 0.4% to E196.25 a tonne.