"Rabobank stands by corn, even as prices tumble"

From Agrimoney:

The prospect of a jump in Chinese imports, plus the risk of lower-than-expected yields, means markets are underpricing new-crop corn, Rabobank said – even as futures tumbled nearly 2%.

Price risks for futures in corn for harvest this autumn "are skewed to the upside", the bank said in a report, estimating that Chicago's December contract should be trading at $6.10 a bushel, well above Friday's values.

The US Department of Agriculture appeared too optimistic in assuming a yield of 164 bushels per acre, when "corn yields have only surpassed 154 bushels per acre twice in the last 10 years".

The bank pegged the yield at 156 bushels per acre, given the expansion of corn seedings in lower-yielding states, such as North Dakota, and the prevalence of successive plantings of the grain, which are less productive than when sowings are rotated with soybeans.

'Prices appear undervalued'

And the bank was upbeat on some areas of corn usage, including for making ethanol, for which the introduction in the US of the higher blended E15 fuel will help boost consumption....MORE