Morgan Stanley said it remained "bullish" on corn prices, and forecast that soybean prices will "continue to outperform", as it cautioned that even downbeat ProFarmer crop tour results could turn out to be optimistic.

The bank's agricultural commodities team, which were represented on last week's Pro Farmer tour of major US corn and soybean producing states, said that its findings on the trip "only confirm our bullishness on corn and, particularly, soybeans".

The comments reflected in part the "unprecedented yield variability" found on the trip "not only from field to field, but even within individual rows of corn and soybeans", which could raised questions over whether Pro Farmer findings had factored in enough of a downgrade from official expectations.

 "Inside of individual fields, corn ear length and girth varied dramatically — a fact the local farmers suggested could increase harvest losses and lower realised yields below our sample-based estimates," focused on ear counts, Morgan Stanley said.

Some brokers have already reported an early-harvest theme of corn yields falling short of numbers farmers had expected, after undertaking ear counts.

Northern disappointment

However, the bank also flagged the poor condition of northern crops, which escaped much of the early dryness which afflicted Midwest farms.

The deterioration of northern crops was also highlighted overnight US Department of Agriculture ratings data which showed temperatures of 100 degrees Fahrenheit last week fuelling a plunge in the health of South Dakota corn and soybeans.

'Real concern'

And Morgan Stanley also questioned whether the USDA has been realistic in assuming that 90.6% of domestic corn will make it to being harvested for grain, rather than being cut for silage.

"Harvested acreage is still subject to debate. Our team, and a number of other scouts, noted a higher frequency of crops already harvested for silage than last year," the bank said.

"We maintain our corn harvested/planted ratio at 88.7%," below the Pro Farmer figure of 89.5%, besides the USDA forecast.

Separately, Mark Welch at Texas A&M University also questioned the Pro Farmer assumption, saying the prospect of a higher figure of abandoned acres was a "a real concern given further deterioration of the crop's condition".

'Still leave us bullish'

Morgan Stanley added that soybean prices were "likely to continue to outperform on these results, with "the magnitude of the downward surprise in soybean yields, relative to corn, coupled with continued data suggesting US demand is not getting rationed" continuing to support values.

For corn, "demand prospects still leave us bullish".

While Brazil had enjoyed a strong safrinha harvest, "the glut of cheap Brazilian corn supplies will not prove sufficient to offset US exports through the balance of 2012".

Furthermore, "weakening corn basis and declining ethanol inventories should help support US ethanol production volumes as we move through the US harvest".