Goldman Sachs has turned negative corn because of the risk of a jump in US plantings undermining prices, in a report which also warns of threats to soybean and wheat prices.

The investment bank, forecasting a return of -10% on agricultural commodities over the next year, said Tuesday's "strikingly bearish" revisions by Washington to crop estimates had prompted it to drop the grain from its list of recommended commodities, where corn had been since May last year.

Goldman maintained its forecast that Chicago corn prices would rise to $4.75 a bushel in year's time, compared with $4.28 for the March 2011 contract on Thursday, factoring in a return to average yields in the US this year and a jump of 10m tonnes in the amount of corn consumed by ethanol plants.

However, it flagged doubts over its assumption that US plantings would rise by 500,000 hectares this year, following the collapse in wheat sowings highlighted in Tuesday's official US reports.

Some other analysts have talked of America's corn area rising by more than twice that amount. 

Sowings risk 

"The unexpected substantial decline in US winter wheat acreage – 14% below last year's and the smallest since 1913 – points to more available land for corn, soybean and cotton planting than we had originally expected," Goldman Sachs said.

The bank advised closure of corn positions it recommended 10 months ago, when the price was $4.15 a bushel.

Including rollover losses, the investment would have lost $0.71 a bushel.

Watch the weather

For soybeans, the bank also said it saw "see near-term downside risks" to its forecast that Chicago prices would stand at $10.50 a bushel in three months time, nearly $0.60 a bushel higher than the price for May futures.

"However, we emphasise that South American weather remains the key driver of any significant moves in soybean prices over the next several months," Goldmans added.

 "Favourable weather developments" would likely lead to "further price weakness".