Goldman
Sachs extended a round of broker upgrades to crop prices forecasts,
predicting fresh records for corn and soybean futures, even as grain
prices fell from record highs, sapped by a wetter outlook for US
weather.
The bank said that
ethanol producers would need to suffer their share of rationing of corn
supplies, now that drought and heat had further lowered prospects for
the US Midwest crop, meaning prices needed to hit $9.00 a bushel on the
three-month horizon, by $2.10-a-bushel higher than previously expected.
This would be "a level at which we believe ethanol
destruction materialises, as it brings the cost of producing ethanol
above out forecast for RBOB gasoline blendstock prices".
The bank's price
estimate - which followed a price caution from Morgan Stanley last week
that corn prices could temporary hit $10 a bushel, while Macquarie on
Monday said corn prices could well "spike higher" – factored in forecast
of the US corn yield tumbling to 126.0 bushels per acre.
This would be a 17-year low, besides being well beneath the US Department of Agriculture's forecast of 146.0 bushels per acre.
'Critically lower level'
Goldman lifted its
estimate for soybean prices on a three-month outlook by $3.75 a bushel
to $20.00 a bushel, believing the oilseed's supply and demand dynamics
warrant outperformance of corn....MORE
Click through for quotes at the time of the post.
And a little credit where credit is due:
That was from April 17th. Although they didn't foresee the drought they were right to be dubious of the USDA's numbers.
