Society Generale SA reduced its corn and wheat price forecasts on speculation that a slower global economy will curb demand for food, animal feed and fuel made from the crops. The soybean outlook was raised.
Wheat prices may average $7.25 a bushel in the third quarter, down from $7.80 a bushel forecast earlier while corn prices may average $6.20 a bushel, down from a previous estimate of $6.50 a bushel, the bank said in a report e-mailed today. Soybean prices may rise to $14.85 a bushel, compared with $14.40 a bushel that was expected.
Ample inventories of ethanol may lead to moderating corn demand, according to the report. Still, the U.S. Department of Agriculture’s forecast for record yields of 166 bushels per acre may be “too optimistic” if temperatures are above normal this summer. The bank recommends buying December corn on the Chicago Board of Trade. The contract traded at $5.39 a bushel today.
Dry weather also may damage wheat crops in the U.S. and eastern Europe, Christopher Narayanan, the head of agricultural research in New York, wrote in the report. The bank recommended investors buy September wheat futures in Chicago, which traded at $6.5425 today.
U.S soybean exports “show continued strength,” and inventories may remain below 200 million bushels unless farmers stage “a significant increase in plantings,” Narayanan wrote. November-delivery soybeans, the most-active contract, traded at $13.30 a bushel today.