Deutsche Bank cut its forecast for corn prices to level not seen for nearly three years, after saying that the MDA crop tour of the Midwest had prompted it to add nearly 5 bushels per acre to its yield forecast.
The bank downgraded its forecast for Chicago corn prices, as measured by the average in the last quarter of 2013, by $0.40 a bushel to $4.20 a bushel, a level not seen since August 2010.
The revision represents the latest in a series of cuts to hopes for corn futures, with Goldman Sachs also reducing its forecast last week, and RJ O'Brien, the Chicago-based broker, saying that prices may fall as low as $3.50 a bushel this year.
Deutsche said its revision followed an inspection of Midwest crops as part of the MDA tour, which had prompted it to raise to 160.8 bushels per acre, from 156 bushels per acre, its forecast for the average US corn yield this year.
'Yield potential extremely strong'
"What surprised us the most was the large plant populations," Deutsche analyst Christina McGlone-Hahn said.
"Despite the high population, almost all stalks had produced an ear, likely due to good subsoil moisture and moderate temperatures.
"The overall takeaway is that the yield potential for corn is extremely strong and better-than-expected," Ms McGlone-Hahn said.
The price forecast reflected an estimate that US stocks will end 2013-14 at 2.2bn bushels, or some 17.5% of consumption.
The historical stocks-to-use ratio – an important pricing metric, in measuring the availability of supplies – is about 14%.
The tour's official report showed a yield of 198.9 bushels per acre, although this was from states, such as Illinois and Iowa, which typically represent among the most productive corn-growing areas.
"If we assume that most ears will lose an inch of length due to various reasons, primarily some dry soils, our tour yield would drop to 171.3 bushels per acre," MDA said.
"It was still surprising to see the excellent state of the corn crop in some areas, especially in north central and north western Iowa and south western."
The MDA, and Deutsche, estimates also assume a "normal" time for the onset of frost, which, if stating at typical dates would "not likely have a material impact on the corn yield," Ms McGlone-Hahn said.
However, she was less reassuring on prospects for frost damage to the soybean crop, which the tour showed will likely not mature until mid-October.
That is a little after the first frost of winter typically hits northern parts of Iowa, the top producing state, with temperatures in the likes of South Dakota typically starting in late September.
"The potential for a strong soybean yield is there, but with the early stage of development relative to frost uncertainty, it is prudent to refine our estimate as new information is available," Ms McGlone-Hahn said.
Deutsche left at 42.8 bushels per acre its forecast for the US soybean yield this year.