Grain prices still heading for a dip, says Goldman

From AgriMoney:

Goldman Sachs stuck by forecasts of a tumble in grain prices by the autumn despite downbeat official estimates of US inventories, warning over buoyant expectations for ethanol plants' appetite for corn.

The investment bank acknowledged that the US Department of Agriculture's below-consensus estimates unveiled on Tuesday for domestic corn and wheat stocks at the close of 2011-12 "could push prices higher in the near term".

Corn futures soared 3% in Chicago in the last session, and wheat prices 5%, before stabilising in early deals on Wednesday.

"We see prices as currently supported by lingering uncertainty on old-crop inventory levels as well as new-crop production," the bank said.

"Near term, we expect that this uncertainty will continue to be reflected in elevated price volatility and a higher risk premium that will support prices above our forecast."

'Lower crop prices' 

However, Goldman retained a forecast that prices of corn will both fall below $6 a bushel in three months' time, implying losses of more than 10% compared with the expectations being priced in on futures market....MORE