Ethanol plants, not speculators, are behind the surge in corn prices, Commerzbank said, urging authorities seeking to calm markets to examine the state-subsidised biofuels industry.
Speculators, whose net long position in Chicago corn has risen to its highest in more than two years, have had a role to play in the doubling of futures in the grain since late June.
"Financial investors are leaping on the bandwagon and fuelling the price increase," Commerzbank said.
"But they are not the main reason for the rally. The state-supported increase of the ethanol blend in the US is a major reason for the rise of corn prices in our view.
"Those who believe the remedy for rising food prices lies in stronger regulation should also consider the role of biofuels in this regard," the bank added.
'Ethanol binge'
The comments come as France as, in its term as president of the G20 group of leading economic nations, is pushing regulations to curb the speculators it blames for fuelling the crop price rally.
Without enhanced oversight, "we run the risk of food riots in the poorest countries and a very unfavourable effect on global economic growth", Nicolas Sarkozy, the French president, warned two weeks ago.
And they follow the cut on Wednesday by the US Department of Agriculture to its estimate for domestic corn inventories at the end of 2010-11 to a 15-year low of 675m bushels, reflecting in the main a higher estimate for corn use in making ethanol.
Biofuel plants are now expected to consume a record 4.95bn bushels of corn, equivalent to 40% of the American crop, 350m bushels more than the USDA initially expected.
And many analysts believe the consumption upgrade will not be the last, with Damien Courvalin at Goldman Sachs forecasting a final figure of 5.05bn bushels.
Rabobank analysts, highlighting an "ethanol binge" on the grain, said that current rates of the production of the biofuel, at 900,000 barrels a day, "implies corn use in excess of 5bn bushels" for the crop year.
'A good number'
Chicago's March corn contract hit a fresh two-year high, for a spot lot, of $7.04 ¼ a bushel on Thursday before weakening in late deals, sapped by a stronger dollar and weakness in other crops.
The grain gain extra support from data on Thursday showing weekly US corn export sales at more than 1.2m tonnes, including deliveries for the 2011-12 season, well ahead of market forecasts of at best 950,000 tonnes.
"That's a good number," Mike Mawdsley, at Market 1, said, adding that it had helped push the grain back on track to meet US Department of Agriculture forecasts for the current crop year, which finishes at the end of August.
Export sales had met 61.3% of USDA expectations for the season, compared with an average of 61.8%.
"On its own, that's good. But where things get really interesting is if someone unexpected turns up to buy, like China," which many analysts believe will require significant imports this year.
"That's the wild card. If China wants 2m-3m tonnes, what's that going to do to the balance sheet
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