Note: this call is not from SG's dynamic duo, Albert Edwards and Dylan Grice.
Societe Generale hiked its forecasts for grain futures, warning that there may be more than weather behind weak increases in crop sowings, even as wheat prices fell to their lowest for six months.Investors should go "underweight" in positions on base metals, the bank said, urging the sale of positions in natural gas too, thanks to concerns of a "bumpy landing" for the slowing Chinese economy."For the remainder of 2011, we doubt that investors will be willing to run large long positions in commodities with very high exposure to the Chinese economy," Societe Generale said in a report.However, the briefing recommended purchasing Chicago corn futures, and hiked forecasts for all three major Chicago-traded crops in 2012 and 2013, with corn and wheat hopes lifted for 2014 too."The sub-group of commodities with the strongest fundamentals is grains - corn, soybean and wheat," the report said."We recommend using the recent correction lower in the corn price to go long the September 2011 Chicago future as the corn market remains extremely tight."...MORE
Prior SG thoughts:September 2010
Société Générale's Dylan Grice: "Higher crop prices 'permanent'" (ADM; SYT)
Société Générale's Dylan Grice-"Commodities: ‘Their Expected Long-Run Real Return is 0%’"
The 5 Black Swans That Keep Société Générale's Dylan Grice Up At Night... (And How To Hedge Against Them All)