U.S. corn stockpiles in the 2011-12 marketing year will tighten further and price gains will outpace increases in other commodities in six months, Goldman Sachs said.
Corn will rise 9 percent in six months, Goldman said in an e-mailed report dated yesterday. U.S. inventories are expected by the U.S. Department of Agriculture to fall to 20.3 million metric tons, the lowest level in 16 years. Global stockpiles may fall to the lowest since 2006-07, according to the USDA. Soybeans may gain 6 percent to $12.90 a bushel on reduced South American production, Goldman said.
“We expect further tightening of the 2011-12 U.S. corn balance, lower South American corn and soybean production and a 2012-13 U.S. soybean balance in deficit,” New York-based analyst Damien Courvalin said. “Corn prices will remain high relative to other crops in coming months in order to secure sufficient acreage gains in the U.S. to help rebuild U.S. inventories.”
Corn futures have declined 11 percent in the past year, partly on speculation that demand would decline amid economic crises in the U.S. and European Union. Soybeans declined 15 percent and wheat has plunged 26 percent.
Soybean acreage may suffer as farmers plant corn in the U.S., Goldman said. Dry weather in Brazil and Argentina will reduce production of both crops, improving export demand for inventories from the U.S., according to the report.
Because of the increased corn planting in the U.S., the biggest exporter of the grain, prices may decline after the harvest in August and September. Gains in soybean futures are expected to outpace corn in the 12-month timeframe, Goldman said in the report. Corn may drop to $5.25 a bushel in a year while soybeans may rise to $12.90 a bushel.
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