We have had some contrasting views from Goldman Sachs and JP Morgan on the outlook for agricultural commodity prices in times overshadowed by coronavirus.
JP Morgan took a relatively optimistic view of price prospects, saying that there was "no sign of tangible demand destruction just yet", and highlighting for instance recent improvement in US corn export sales, and cotton export sales too.
However, Goldman Sachs underlined the dent to price prospects from pummelled oil values - in lowering ag production costs, besides the potential hit to biofuels - and took a more dim view of the demand outlook.
The difference in outlook was highlighted in corn, in which Goldman recommended a short bet, in May futures, while JP Morgan urged a tentative buy, in July call options.
Which bank will prove the best forecaster? That may depend on what timescale is chosen, of course.
Below, we have used Goldman’s forecast for prices on six-month horizon, and JP Morgan’s expectations for average spot prices in the July-to-September quarter.
Also included for reference are current spot prices, and the price of September (or October) futures lot.
Come back in six months to see whose forecasts proved closest to reality.
||September contract price
|Corn ($ per bushel)||3.40||3.90||3.33 3/4||3.47 1/4|
|Cotton (cents per pound)||60||63||56.01||57.86*|
|Soybeans ($ per bushel)||8.50||9.40||8.24 1/4||8.35 3/4|
|Sugar (cents per pound)||10||15||10.70||10.86*|
|Wheat ($ per bushel)||5.25||5.20||5.07 1/2||5.14 1/4|
|*= October contract|