Top-end ideas for the US corn crop, questioned on Monday by acreage figures, received another dent from downbeat yield estimate, which prompted Commerzbank to add its voice to banks upbeat on price prospects.
Strong yields from the early stages of the US harvest allowed investors largely to sideline data from the Farm Service Agency on Monday signalling that the area on which farmers had been prevented, by wet spring weather, from sowing corn is higher than official forecasts show.
The US Department of Agriculture is, in the October edition of its much-watched Wasde crop report, expected to lower its forecast for US corn plantings this year by 0.8m-3m acres.
However, investors may be being too upbeat on yields too despite better-than-expected results from the early harvest, Commerzbank said, citing deteriorating crop condition and a yield forecast from Lanworth.
The USDA pegged the proportion of US corn rated "good" or "excellent", as of Sunday, at 53%, down 11 points in five weeks.
Meanwhile, consultancy Lanworth on Wednesday pegged the US corn yield at 152.9 bushels per acre, below the 155.3 bushels per acre the USDA revealed in its latest Wasde, last week.
The Wasde had made "small or no changes in Illinois, Iowa, Minnesota, and Wisconsin, where Lanworth expects the greatest production losses", the consultancy said, forecasting a US corn harvest of 13.48bn bushels, 360m bushels below the USDA estimate.
'More balanced outlook'
Separately, fertilizer giant PotashCorp forecast an even smaller crop, of 13.3bn bushels, saying that "although the summer was cool and beneficial for pollination, it masked the fact that soil moisture levels were rapidly declining in some regions".
That dryness had left "several key states with corn condition ratings below historical levels", teh Canadian-based group said.
"The recent hot and dry weather will impact the crops ability to fill and we expect the final US average yield will fall below USDA's current estimate."
PotashCorp said that its crop forecast "would allow for some much-needed rebuilding of US corn stocks but implies a more balanced outlook than USDA projections," a dynamic implying more support for prices.
Commerzbank said that the USDA appeared "overly optimistic about the US corn crop" and was "likely to revise its estimate down in the coming month, especially since a downward revision of the acreage is also probable.
"We thus see further recovery potential for the corn price, which should also benefit the price of wheat," the bank said.
The forecast tallies with upbeat price forecasts from the likes of Societe Generale, which has forecast a return above $5 a bushel, and Morgan Stanley, which rates corn the most bullish commodities bet.