Goldman Sachs had been short wheat for delivery in May 2013 versus corn on the Chicago Board of Trade, New York-based analyst Damien Courvalin said today in an e-mailed report. The price difference closed at about 72 cents a bushel yesterday, allowing for a gain of almost 50 cents a bushel after the bank entered its bearish wager when the spread was at $1.21, according to the report.
Wheat production in the former Soviet Union, Australia, India and Argentina may be 15 million metric tons below the U.S. Department of Agriculture’s forecast in July because of dry weather, creating “growing upside risks to wheat prices in coming months,” Courvalin said. The USDA is slated to update its global crop estimates Aug. 10.
Still, global wheat inventories are likely to remain more ample than corn, meaning wheat may underperform in the next 12 months, Courvalin said. Both grains are used in livestock feed. Corn prices have surged 59 percent since mid-June as the worst drought since 1956 damaged crops in the U.S., while wheat rose 41 percent and soybeans rallied 24 percent in the same period.
The bank said it’s bullish soybeans for November delivery versus a bearish wager for December corn, as soybeans are likely “to reverse part of their recent underperformance to corn,” according to the report.
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