A return by corn back above $7 a bushel is in the offing, banks said, even as the grain struggled to retake the much-watched $6-a-bushel mark, depressed by weak sentiment over exports.

Chicago corn for December recovered early losses to regain $6 a bushel in early deals, before easing back to $5.99 a bushel in closing deals, up 0.2% on the day.

However, the current quarter's lower prices – down 25% from a record high set in June – will prove a market nadir, with values to recover next year, Societe Generale and Standard Chartered said.

Standard Chartered analyst Abah Ofon forecast that Chicago corn prices will average $7.75 a bushel in the first quarter of 2012, warning that gloom over US shipments of the grain has been overdone.

"We still expect markets to trend higher in the quarter," if at a less aggressive pace than seen in the January-to-March period of this year," Mr Ofon said.

"We are still bullish on corn."

Tight supplies

Societe Generale that corn prices were set to "break out of the recent range-bound pattern to the upside", even though it foresaw US supplies as "slightly looser" than the US Department of Agriculture estimate, which markets take as the benchmark.

That implies more plentiful stocks than the USDA is factoring in, with a ratio of 6.7%. The stocks-to-use ratio is seen as a key metric of the availability of a commodity's supplies, and therefore the prices buyers are likely to have to pay to acquire them.

"However, both estimates are well below the 10-year average of 13.4% and the five-year average of 12%," SocGen analyst Michael Haigh said.

"If prices do not encourage needed acreage and/or the weather next summer disappoints, inventories could remain tight, sending prices even higher than currently forecast, especially in the longer term."

US vs Argentina vs Ukraine

Mr Ofon's stronger view on US corn shipments reflected the stimulus that lower prices would give to buyers, besides the limited supplies in rival exporters.

"It is important to note that the current season's US corn balance, of about 33m tonnes, is significantly higher than that of Argentina, at about 21m tonnes, and Ukraine, at about 13m tonnes, which are expected to post the second- and third-biggest surpluses, respectively, in 2011-12," he said.

He challenged the view that poor recent US figures, which showed latest US weekly corn export sales falling to their lowest since October 2010, would set a trend.

"While US corn sales so far in November are well below the give-year average, October sales far exceeded last season's figure, which suggests there is still significant interest in US corn", he said.

Prices below $6 a bushel would, as they have done earlier this year, spark Chinese import demand.

Euro caveat

The biggest headwind to a corn price revival was the macroeconomic fears which have centred on the eurozone's sovereign debt crisis.

"We believe investor demand will return, but this will depend very much on sentiment, which in turn hinges on developments in the euro area," Mr Ofon said.