News
08.02.2010
Corn Price Forecasts Cut by Morgan Stanley on Harvest
Corn may average $3.90 a bushel in the 2009-10 marketing year, 13 percent less than an earlier forecast, after good weather in the United States boosted output, Morgan Stanley said.
The crop may average $4.75 a bushel in 2010-11 and $5 in 2011/12, down as much as 20 percent from previous estimates, analysts including New York-based Hussein Allidina wrote in a note e-mailed today. The bank also pared forecasts for wheat for each of the next three years, according to the report.
Morgan Stanley joins Standard Chartered Plc in cutting targets for corn prices amid concern supplies may outpace demand after better-than-expected U.S. output. Corn is the biggest U.S. crop, valued at $47.4 billion in 2008, government data show.
There had been “largely excellent weather conditions” in the U.S., which had resulted in better-than-expected corn and wheat output, the report said. The marketing year starts Sept. 1.
Corn futures on the Chicago Board of Trade have dropped 14 percent this year. The March delivery contract traded at $3.555 a bushel at 12:29 p.m. in Singapore after declining to the lowest price in four months on Feb. 5.
“The favorable weather during the months when yield is determined was the primary reason for the year’s expected record yields in corn,” the report said. “We are using a yield of 160 bushels/acre in 2010-11 as we assume a return to normal, not ideal, weather and the continued use of biotech seed.”
Still, the U.S. Department of Agriculture is expected tomorrow to trim its estimate of corn reserves before the 2010 harvests to 1.75 billion bushels from a previous estimate of 1.76 billion, a Bloomberg News survey showed.
Wheat Outlook
Wheat may average $5 a bushel in 2009-10, $6 the following year and $6.25 in 2011-12, the report said. That compares with the previous forecasts for the three years of $5.50 a bushel, $6.50 and $7, it said. Wheat traded today at $4.80 a bushel.
“Wheat supplies appear to be ample and global supplies are expected to hold steady over the course of the next few years,” wrote Allidina. “Unless we see a sharp uptick in corn prices, leading to the use of wheat as a substitute feed grain, we do not see the fundamentals improving in the coming years.”
Morgan Stanley retained its soybean price forecasts at $9 a bushel for 2009-10 and $11 for the next year. The forecast for 2011-12 was reduced by $1 to $11.50, it said.
Bloomberg
