USDA will cut wheat estimates further – Goldman

The downgrade by US farm officials to estimates for world wheat production will not be their last, Goldman Sachs said, forecasting a 34% slump in Australian exports of the grain, and outperformance in futures prices.

Revisions on Thursday by the US Department of Agriculture, in its benchmark Wasde report, to crop estimates attracted most attention in corn, for which the estimate for year-end stocks was cut to 69, bushels, well below market expectations.

However, it is wheat futures which stand to fare better, the bank said, flagging the threat of further downgrades to harvest estimates, notably in Argentina, Australia and China.

The comments were echoed by rival banks including Societe Generale, which termed wheat “the big winner” of the Wasde report, and Credit Suisse, which said “the outlook for wheat prices may be slightly more bullish than other grains”.

‘Further downgrades necessary’

Goldman Sachs analyst Damien Courvalin said that world wheat production in 2012-13 looked, at 647.8m tonnes, set to turn out 5.2m tonnes lower than the USDA is expecting.

“Further downgrades will be necessary” by the USDA.

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