Investment bank Goldman Sachs said agricultural commodity prices are on course for a fourth year of decline, with corn prices at the end of 2018 running 33 cents a bushel below the current futures price for December 2018 delivery, said Agrimoney. At the same time, Dutch bank ABN Amro forecast a “more positive” year ahead, with improved corn, wheat, and soybean prices.
Based in New York, Goldman Sachs forecast that corn prices will remain “flat at $3.50 a bushel for 3, 6, and 12 months,” and that soybeans will also stay flat, at $9.80 a bushel. This would set a “new normal” of 2:8 for the soy-to-corn ratio that determines which crop will be more profitable to grow. For years, the ratio was 2:5. Goldman Sachs said that as the global economy grows, soybeans will be in higher demand than corn. The bank predicted an upturn in cotton prices but “moderately bearish” livestock prices.
ABN Amro said that 2018 crops will be smaller than the bumper harvests of 2017 and that “grains will benefit from continuing strong demand from the feed industry in China.” The Dutch bank forecast Chicago wheat prices of $5 a bushel a year from now, with corn at $4 a bushel and soybeans at $10.50 a bushel. All three estimates were higher than December 2018 futures prices, said Agrimoney.