A crop disaster in South America or a collapse in the dollar are the only hopes for halting the market correction, Rabobank has said in a report slashing estimates for corn, soybean and wheat prices.

The "bearish blow" dealt by Tuesday's Washington data, which raised estimates for global supplies of all three crops, had caused a "fundamental shift in focus" in markets, giving sellers the upper hand, a report from Rabobank's City office said.

To add the impact of looser supply and demand fundamentals, technical factors were playing against crops too, with speculators holding large long positions in both corn and soybeans.

"This is significant as a substantial proportion of these positions are now out of the money given the recent fall in prices, meaning there is potential for a sustained period of long-side liquidation," the note said.

Divine help? 

Rabobank, which had previously viewed soybean prices sitting in the range of $8.70-90 in the middle of the year, said they may now fall to $8.50 a bushel.

The best hopes for prices to escape a rout were a "crop disaster in South America or a further collapse in the dollar", Rabobank said.

"Investors who have been trying to build a bullish case will have to bide their time to see if the weather gods come to their rescue."

Drought in Argentina last year proved a significant prop for soybean prices, while the weakening dollar helps prices of assets denominated in the currency by making them more competitive

Stocks rebuild 

The report highlighted that for US wheat, the stocks-to-use ratio – a key measure of market tightness, and so a key determinant of crop prices – was on track to hit 49%, its highest level since the late 11980s.

"Incredibly, the ratio has recovered from a record low of only 13% in the 2007-08 season to 49% in only two seasons," Rabobank said, flagging the impact of stronger competition from Russia and Ukraine on US exports.

On a global level, stocks were on course to jump 61% in two seasons.