July 12 (Reuters) - Investment bank Goldman Sachs cut its U.S. corn yield forecast for the second time in less than two weeks to 143.5 bushels per acre from 153.5 bushels per acre and raised its price forecasts for corn, soybean and wheat due to a drought in the U.S. Midwest.
The worst Midwest drought in a quarter century is doing more damage to U.S. crops than previously expected with the U.S. Department of Agriculture (USDA) slashing its estimate for what was supposed to be a record harvest.
"Weather in the U.S. Midwest ended the month of June hotter and drier than expected, with current forecasts for July also pointing to above-average temperatures and more importantly, below-average precipitation," Goldman said in a note to clients.
Goldman's updated yield forecast is below the U.S. Department of Agriculture's (USDA) forecast of 146 bushels an acre. The USDA slashed its forecast on Wednesday, citing the Midwest drought. (nL2E8IB261)
"Our updated yield forecast is 16.5 bushels an acre below what we believe the U.S. corn yield would have been under average weather conditions this summer," the bank said.
"On this metric, it would be the second largest yield loss since 1950 if we exclude 1983 and 1993, years with major floods."
Goldman also forecast a deficit in the U.S. corn balance in 2012/13 for the third consecutive year.
Goldman raised its three-, six- and 12-month price forecasts for Chicago Board of Trade corn futures to $6.90 per bushel, from $6.30 previously.
For CBOT wheat, Goldman raised its price forecasts for the same three time periods to $7.70 a bushel, from $7.15.
For CBOT soybeans, the investment bank raised its three- and six-month price forecasts to $16.25 per bushel from $15.50.
