Exchange prices for corn are rising on forecasts of a decline in the harvest in Ukraine and the EU
Lack of precipitation and heat waves in May and June significantly reduced the potential of the corn harvest in the EU. That is why the experts of the MARS monitoring agency in their July report reduced the estimates of corn, soybean and sunflower production in the EU in 2022 by 8-9%.
Forecasts have been lowered the most for spring crops due to much longer than usual dry weather across much of Europe. At the same time, winter crops, which are already starting to be harvested, were almost unaffected by the drought, and will have a yield at the level of the average 5-year indicator. Spring crops were most affected in Spain, southern France, northern and central Italy, central Germany, northern Romania, eastern Hungary, southern and western Ukraine.
In most of these regions, the effects of the most extreme heat since 1990 have been exacerbated by much lower than normal soil moisture levels, as rainfall has been below normal and temperatures have been above normal in recent months. The water level in the reservoirs is low, and the amount of water is insufficient to irrigate spring crops.
The heat, which will last until the end of July, will negatively affect plants in the flowering phase, reducing the fertility of flowers. At present, it is almost impossible to avoid adverse effects as the weather remains dry and hot.
In Ukraine, the development of corn crops is also uneven: in the southern regions, where there was a lack of precipitation, the yield is forecast at the level of 3-5 t/ha, while the situation is much better in the west and north of the country.
The Baltic Sea region has the most favorable conditions for crops.
Compared to June estimates, the corn yield forecast in the EU has been reduced by 7.9% to 7.25 t/ha, which will be 7.8% less than the 5-year average.
November corn futures on the Paris Euronext yesterday rose €4.25/t to €306.25/t or $313.06/t, partially recovering from Thursday's €16/t collapse amid the signing of the unblocking deal ports of Ukraine.
October Black Sea corn futures in Chicago also rose $2/t to $316.75/t yesterday after falling $5.5/t on Thursday.
Almost reversing the decline of the previous week, December corn futures in Chicago yesterday rose by 3.5% to $229.9/t on data about the deterioration of crops in the EU and the US and the missile attack on the port of Odesa, which reduces the likelihood of a quick recovery of exports from of Ukraine.
According to NASS Crop Progress, as of July 24, 62% of the U.S. corn crop has completed flowering, which is 8% below the 5-year average. During the week, the number of crops in good or excellent condition decreased by 3% to 61%, while last year it was 64%.
September Brent crude oil futures rose by 1.9% to $105.25/barrel yesterday, despite a possible 75 bp interest rate hike by the US Federal Reserve on July 26-27, which will dampen fuel demand.
