Commerz foresees grain, oilseed price recoveries


Commerzbank joined commentators cautioning that the slump in grain and oilseed prices may have gone far enough, foreseeing corn futures regaining $4 a bushel and wheat $6 a bushel, as futures indeed staged a revival.

The bank slashed its forecasts for futures in corn futures by up to $1.10 a bushel, for soybeans by up to $3.50 a bushel, and wheat by up to $1 a bushel, acknowledging that "prospects of high harvests prevent a sense of scarcity".

However, the forecasts remained broadly above the futures curve, with the bank foreseeing a "moderate price recovery" in store, "and not only because the weather cane still cause problems.

"Other aspects are also playing a role, such as possible acreage adjustments in the southern hemisphere," with potential pressure, for example, on Brazilian soybean plantings later this year.

'Downtrend in prices exaggerated'

The comments add Commerzbank to a growing band of commentators who have questioned market gloom on prices, with a growing chorus of expectation that Chicago corn prices may be on their way to $3.50 a bushel.

Macquarie last week said a pricing model suggested futures trading at $3.75-4.00 a bushel, while the University of Illinois said on Monday that "an average price in the year ahead near $3.75 a bushel would be consistent with similar supply-consumption scenarios of the recent past".

Commerzbank forecast corn futures averaging $4.00 a bushel in both the last three months of this year and the January-to-March period of 2015, compared with the $3.85 ј a bushel that the December contract, for example, was trading at in late deals on Wednesday.

"The expected further supply surplus in 2014-15 and corresponding inventory build-up should keep weighing on corn prices," the bank said.

"Yet we consider the downtrend in corn prices in recent days to be exaggerated, and therefore look for stabilisation at a slightly higher level."

'Current price levels are too low'

For wheat, the bank's forecast of Chicago futures averaging $6.00 a bushel in the October-to-December quarter, and in the first three months of next year, was substantially above the futures curve.

December futures, for instance, were trading at $5.62 ј a bushel on Wednesday.

"Just like we thought that the wheat price had temporarily increased too strongly in spring, we now believe the current price levels are too low," Commerzbank said.

Although there is "no reason for supply fears, even a small surplus would mean that global stocks at the end of 2014-15 will still fall far short of stocks in the years from 2009-10 until 2011-12," while US wheat inventories ended 2013-14 at a six-year low.

'Should dampen the expansion'

And for soybeans, the bank flagged that although a much-watched report on US inventories two weeks ago as revealed stocks bigger than expected, they were, at 405m bushels, at a 37-year low.

Furthermore, in Brazil, agronomic needs to clamp down on soybean sowings, after plantings for both main and safrinha (second) crop this year in many areas, may curtail plantings.

"Since soybeans were planted as the second crop in a larger part of the growing area in Brazil, this year, the need for crop rotation becomes pressing, and this should dampen the expansion," the bank said.

Soybean futures will "recover a bit", to $11.00 a bushel in the last quarter of 2014.

European price prospects

Some revival in soybean futures bodes well for prices of fellow oilseed rapeseed too, which has been depressed in part by the soft soy complex.

With the world supply situation "at best balanced" for 2014-15, with a decline in Canadian production likely to offset a strong European harvest, "the price of rapeseed should also recover a bit", reaching potentially E350 a tonne in Paris in the first three months of 2015.

February rapeseed futures were trading on Wednesday at E330.25 a tonne.

However, Commezbank was less upbeat over Paris wheat prices, saying that "we see hardly any potential for a recovery near-term.

"After all, export dynamics have slowed somewhat, the high expected supply works to dampen the price, and the competition from the Black Sea region prevents large price jumps."


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