Climateer Investing: Deutsche Bank: "US corn harvest to fall - a little - in 2014" (as current crop hits life-of-contract lows)

Monday, November 4, 2013

Deutsche Bank: "US corn harvest to fall - a little - in 2014" (as current crop hits life-of-contract lows)

Low $4.25, last $4.2640.
Deutsche, along with Macquarie, have been the most accurate (and earliest) corn analysts this season.

US corn production will fall next year, but not that much, Deutsche Bank said, despite the prospect of a large switch to soybeans.

Deutsche Bank, in its first forecasts for 2014, pegged the US corn crop at 13.7bn bushels – a result second only to that expected for the current harvest.

The number factored in a forecast for sowings of 92.0m acres, down some 4.0m acres on this year's total, on Deutsche's own estimate, but with the yield forecast a 162 bushels per acre, strong by historical standards.

Much of the lost area will go to soybeans, for which Deutsche forecast plantings of a record 82.1m acres, up 5.5m acres on this year's totak, on its own estimates.

Deutsche forecast US corn stocks ending 2014-15, with a stocks-to-use ratio, a key pricing metric, of 16.6%, the highest since 2005-06, the last season when Chicago futures fell below $2 a bushel.

US soybean inventories will recover to 524m bushels, equivalent of 16.0% of use, the highest since 2006-07, during which Chicago futures fell to $5.26 ½ a bushel.

Current-year estimates

Analysts are still seeking surety on the size of this year's US harvest, with doubts enhanced by a slow-starting harvest, a reflection of a late sowing season, and the void left by the cancellation of the US Department of Agriculture's benchmark Wasde crop report for October, because of the Washington shutdown.

Deutsche pegged this year's corn yield at 157.7 bushels per acre, and the soybean result at 42.3 bushels per acre, above current USDA forecasts of 155.3 bushels per acre and 41.2 bushels per acre respectively....MORE

*May
Corn: Deutsche sees potential for price below $4
July
Macquarie Calling For Corn in the Low $4's

That May call was at $6.50. Macquarie beat 'em though. From December 11, 2012 at $8.215:

Macquarie "Wheat 50% overvalued - corn to hit three-year low"

Wheat futures for next year's crop are overvalued by nearly 50%, and corn prices are on their way to their lowest since 2010, Macquarie said, pegging soybeans as the best bet of Chicago's big three crops for 2013.