Rabobank renewed the spree of bullish crop price forecasts even as values flagged in Chicago, sapped by concerns as to how well demand is holding up in the face of elevated values.
The bank, downgrading to 38 bushels per acre its forecast for this year's US soybean yield, said that for the oilseed the "price risk remains clearly skewed to the upside, with 2013 contracts particularly vulnerable to high price moves".
The full impact of the decline in production to 2.8bn bushels had yet to be felt, with China's imports of the oilseed continuing at an "unsustainable pace" and evidence of slowdowns in US hog and poultry industries yet to surface".
While South America could achieve a record crop, for harvesting early next year, this crop was still a month away from being planted, questioning the extent of the $2-a-bushel discount that traders were attributing to 2013 soybean contracts.
In fact, "further yield loss to the US soybean crop may quickly move us into unchartered territory, which could easily push prices above $20 a bushel during the second half of 2012," Rabobank said.
The comments follow a pause in upbeat comments on crop prices from the likes of Goldman Sachs and Morgan Stanley, which have also forecast soybean futures potentially hitting $20 a bushel.
And they came as Chicago grain and oilseed futures extended a losing streak to three days, taking the spot August soybean lot, which set a record $17.77 ¾ a bushel down to $16.35 ¾ a bushel at one point.
Crop prices as of close on Thursday
Paris wheat, (November): E256.50 per tonne, +0.3%
London wheat, (November): £188.50 per tonne, -0.3%
Chicago corn (December): $7.95 ¾ per bushel, -0.6%
Chicago soybeans, (November contract): $16.16 ½ per bushel, -0.8%
Kansas wheat (September): $8.69 per bushel, -1.7%
Chicago wheat, (September): $8.65 per bushel, -1.7%
The best-traded November lot dropped below $16 a bushel and, according to Rice Dairy analyst Jerry Gidel "one more time checked out the stops down there", the automatic orders often placed at key psychological or technical price levels.
Chicago wheat for September fell 2.7% at one point.
'More maturing, fatigued feel'
The declines were attributed in part to weakness across risk assets, after Mario Draghi, the president of the European Central Bank, failed in a much-watched speech to build on comments last month that the institution would do "whatever it takes" to safeguard the eurozone.
"At first glance, ECB statements did not offer much support to the macro markets," Benson Quinn Commodities.
Furthermore, there was some concern that, in US Commodities' words "the market continues to take on a more maturing, fatigued feel as bullish data does not excite the market to new highs.
"The concern continues to move from a supply market to a demand market.
"It is known that the crop will be smaller and damage is extensive, it is now more of trying to figure out what stand will the USDA take on feed usage, ethanol usage, and exports. "
However, crops staged some revival in late deals as doubts emerged, as on Wednesday, over expectations for much-needed rain for drought-hit Midwest crops.
"There has been talk about more rain in the forecast for the Corn Belt. We have not been able to find the model that supports that thought," Darrell Holaday at Country Futures said.
"As a matter of fact the midday run [of the GFS weather model] is drier."
Furthermore, ideas of demand were helped by the purchase by Mexico of 1.52m tonnes of US corn, and weekly US export sales data which, while depressed by historical levels, came in in line with forecast.
"Export sales for wheat were solid at 571,000 tonnes," Mr Holaday said, with the grain getting extra support from a report on Interfax that Russia's agriculture ministry was considering a cut to 70m tonnes in its forecast for the country's grains harvest, below an estimate of 80m tonnes set earlier this week.