Credit Suisse raised its forecast for grain and oilseed futures,
but not by enough to alter a downbeat outlook for prices, thanks to the prospect
of rich South American crops coming to the rescue of world supplies.
The bank raised its forecast for the average price of
Chicago corn futures by $0.25 a bushel for the current quarter and by $0.50 a bushel
for the first three months of 2013.
For soybeans, the estimates were raised by $1 a bushel for
However, even including their upgrades, its forecasts were "below
the forward curve and consensus estimates", especially for corn, for which
March futures were on Friday trading some 10% above the Credit Suisse forecast
for the first quarter of next year.
The comments tallied with a downbeat mood in Chicago on Friday, where grains lost some of the gains made in the last session on estimates in the US Department of Agriculture's monthly Wasde crop report.
The bank acknowledged that world stocks of corn were, when
compared with use, "at the lowest level seen during the period for which we
have comparable data, since 1960", excluding China, whose inventories are
unavailable to world markets, and so often excluded from global supply
Credit Suisse corn price forecasts and (change on previous)
Q4 2012: $7.25 a bushel, (+$0.25 a bushel)
Q1 2013: $7.00 a bushel, (+$0.50 a bushel)
Q2 2013: $6.25 a bushel, (unchanged)
Q3 2013: $5.50 a bushel, (unchanged)
Q4 2013: $5.50 a bushel, (unchanged)
"This meant that slight changes to global supply and demand
in the coming months will have a significantly larger effect on prices than
they would in a less tight market – almost ensuring significant further price
volatility," Credit Suisse said.
However, market focus "will now switch towards South
American production", and the crops due for harvest early next year which - if
a weak El Nino holds, bringing ample rains - should enjoy better-than-average
'Prices to trend
Indeed, US Department of Agriculture forecasts, restated on
Thursday, of a 28.0m-tonne Argentine corn crop and 70.0m-tonne Brazilian harvest may yet
"We expect corn prices to remain elevated for the remained
of the year," the bank said.
Credit Suisse soybean price forecasts and (change on previous)
Q4 2012: $15.00 a bushel, (+$1.00 a bushel)
Q1 2013: $14.50 a bushel, (+$1.00 a bushel)
Q2 2013: $14.50 a bushel, (+$1.50 a bushel)
Q3 2013: $13.00 a bushel, (+$0.20 a bushel)
Q4 2013: $13.00 a bushel, (+$0.80 a bushel)
"However, the prospects of a better South American crop will
likely mean prices will begin to trend lower in the next few months."
Similarly for soybeans, while US inventories are heading for
historic lows, Credit Suisse said that "the focus will now shift
towards South American production", and the prospect of bumper Argentine and Brazilian harvests.
"We expect prices to trend lower in the coming months as the
initial shock of the US drought passes, and the realisation of a larger South
American crop begins to feed into prices."
The bank was more upbeat in its comments on prospects for
wheat prices, in line with peers such as Goldman Sachs and Societe Generale, saying
that "with so many key producing countries being affected by weather-related
disruptions, prices will likely remain elevated as the world adjusts to smaller
Indeed, the southern hemisphere looks set to provide little
relief to wheat supplies, with Australia's prospects hurt by too little rain,
and Argentina's by too much.
Credit Suisse wheat price forecasts and (change on previous)
Q4 2012: $8.50 a bushel, (+$1.00 a bushel)
Q1 2013: $8.25 a bushel, (+$0.75 a bushel)
Q2 2013: $8.00 a bushel, (+$0.75 a bushel)
Q3 2013: $7.50 a bushel, (+$0.50 a bushel)
Q4 2013: $7.00 a bushel, (unchanged)
"We are increasingly concerned by the outlook of smaller global
production and exports in the coming year," Credit Suisse said.
"With global stocks falling once again, we believe the
outlook for wheat prices may be slightly more bullish than other grains."
However, it added that it did "not see any strong catalyst
for significantly higher prices", and while revising its forecast for wheat
markets higher too, left estimates below the level futures are suggesting if,
unlike in the row crops, "above consensus".