Tuesday, September 13, 2011

Comodity Softs: "Goldman sides with soybeans, but Rabo prefers corn"

Rabobank is very, very good in this space.
From Agrimoney:
Which crop is the better bet, corn or soybeans?
Analysts pretty much gave up on wheat futures leading any charge in Chicago, after the US Department of Agriculture on Monday, in a much-watched report, lifted its forecast for Canadian and European Union exports, at America's expense.
US wheat inventories now look like ending 2011-12 at 20.7m tonnes, 1.45m tonnes higher than previously thought, the USDA said, lifting its estimate for world stocks too.
"The USDA report was directly bearish for wheat prices," Luke Mathews at Commonwealth Bank of Australia said, in comments which could be attributed to any number of analysts.
Short term vs longer term
However, corn and soybeans both found favour, despite the surprise uplift by the USDA to its estimate for domestic production of the oilseed.
The revision did not throw Goldman Sachs into reversing its championing of soybeans last week.
OK, corn, for which the USDA cut its domestic yield estimate more than the market had expected, looked set to outperform both soybeans and wheat "in the short-term".
However, its price prospects looked "capped" at about $8.00 a bushel, when "the potential for large ethanol demand destruction" kicks in.
Soybeans, while presenting a "near-term bearish" outlook, have "long-term upside potential" thanks to the prospect for harvested acres turning out smaller than the USDA has so far factored in, following flooding around the Missouri river earlier this year....MORE