Commerzbank joined commentators cautioning that the slump in
grain and oilseed prices may have gone far enough, foreseeing corn futures
regaining $4 a bushel and wheat $6 a bushel, as futures indeed staged a revival.
The bank slashed its forecasts for futures in corn futures
by up to $1.10 a bushel, for soybeans by up to $3.50 a bushel, and wheat by up
to $1 a bushel, acknowledging that "prospects of high harvests prevent a sense
However, the forecasts remained broadly above the futures
curve, with the bank foreseeing a "moderate price recovery" in store, "and not
only because the weather cane still cause problems.
"Other aspects are also playing a role, such as possible
acreage adjustments in the southern hemisphere," with potential pressure, for
example, on Brazilian soybean plantings later this year.
'Downtrend in prices exaggerated'
The comments add Commerzbank to a growing band of
commentators who have questioned market gloom on prices, with a growing chorus
of expectation that Chicago corn prices may be on their way to $3.50 a bushel.
Macquarie last week said a pricing model suggested futures
trading at $3.75-4.00 a bushel, while the University of Illinois said on Monday
that "an average price in the year ahead near $3.75 a bushel would be
consistent with similar supply-consumption scenarios of the recent past".
Commerzbank forecast corn futures averaging $4.00 a bushel
in both the last three months of this year and the January-to-March period of
2015, compared with the $3.85 ¼ a bushel that the December contract, for
example, was trading at in late deals on Wednesday.
"The expected further supply surplus in 2014-15 and
corresponding inventory build-up should keep weighing on corn prices," the bank
"Yet we consider the downtrend in corn prices in recent days
to be exaggerated, and therefore look for stabilisation at a slightly higher
'Current price levels
are too low'
For wheat, the bank's forecast of Chicago futures averaging
$6.00 a bushel in the October-to-December quarter, and in the first three
months of next year, was substantially above the futures curve.
December futures, for instance, were trading at $5.62 ¼ a
bushel on Wednesday.
"Just like we thought that the wheat price had temporarily
increased too strongly in spring, we now believe the current price levels are
too low," Commerzbank said.
Although there is "no reason for supply fears, even a small
surplus would mean that global stocks at the end of 2014-15 will still fall far
short of stocks in the years from 2009-10 until 2011-12," while US wheat
inventories ended 2013-14 at a six-year low.
'Should dampen the
And for soybeans, the bank flagged that although a
much-watched report on US inventories two weeks ago as revealed stocks bigger
than expected, they were, at 405m bushels, at a 37-year low.
Furthermore, in Brazil, agronomic needs to clamp down on
soybean sowings, after plantings for both main and safrinha (second) crop this
year in many areas, may curtail plantings.
"Since soybeans were planted as the second crop in a larger
part of the growing area in Brazil, this year, the need for crop rotation becomes
pressing, and this should dampen the expansion," the bank said.
Soybean futures will "recover a bit", to $11.00 a bushel in
the last quarter of 2014.
Some revival in soybean futures bodes well for prices of
fellow oilseed rapeseed too, which has been depressed in part by the soft soy
With the world supply situation "at best balanced" for
2014-15, with a decline in Canadian production likely to offset a strong
European harvest, "the price of rapeseed should also recover a bit", reaching
potentially E350 a tonne in Paris in the first three months of 2015.
February rapeseed futures were trading on Wednesday at
E330.25 a tonne.
However, Commezbank was less upbeat over Paris wheat prices,
saying that "we see hardly any potential for a recovery near-term.
"After all, export dynamics have slowed somewhat, the high
expected supply works to dampen the price, and the competition from the Black
Sea region prevents large price jumps."