The collapse of oil prices stopped the growth of corn prices

A sharp drop in oil prices on Wednesday led to lower prices for corn and other agricultural crops, which updated their next highs the day before.

January Brent crude futures on the ICE Futures Europe exchange fell 3.2% to 8 82/barrel, while December WTI crude futures on the New York NYMEX exchange fell by 8 80.8/barrel and continue to fall in price.

The main reason for the fall in prices was the news about Iran's resumption of negotiations on a nuclear program that will open up access for Iranian oil to world markets, as well as data on oil reserves in the United States and an increase in production in Russia.

According to the weekly report of the US Department of Energy, last week commercial oil reserves in the country increased by 3.29 million barrels to 434.1 million barrels, distillate reserves – by 2.16 million barrels to 127.12 million barrels, while gasoline reserves decreased by 1.49 million barrels to 214.26 million barrels. Ethanol production increased by 1 thousand barrels/day to 1.107 million barrels/day, which is only 1000 barrels lower than the record figure of 2008. Ethanol reserves increased by 204 thousand barrels to a 5-week high of 20.129 million barrels.

The market expects that at today's OPEC+ meeting, its participants will not support an increase in production by more than the previously agreed 400 thousand barrels per month, since in October production increased by only 140 thousand barrels per day due to production cuts in Angola and Nigeria, although it reached the largest 27.58 million barrels per day in the last 1.5 years.

Fitch Solutions experts predict that Brent crude will fall in price in the first half of 2022 amid slowing demand due to new quarantine restrictions and increased reserves next year.

December corn futures on the Chicago Stock Exchange after a sharp rise in price on Monday yesterday fell by 1.6% to вчора 222/ton. an increase in ethanol reserves and falling oil prices will soon accelerate the decline in quotations, especially given the increase in harvest forecasts for the United States on the eve of the release of the next USDA report.

IHS Markit (Informa) has increased its forecast for corn yields in the United States in 2021/22 MG to 178.7 bushels/acre, which is significantly higher than the October USDA estimate of 176.5 bushels/acre, and according to the average estimate of a Bloomberg survey, the yield will be 176.9 bushels/acre.

In Ukraine, purchase prices for corn this week increased in ports by 1 10/ton to 2 268-272/ton or 8000-8150 UAH/ton against the background of a shortage of supplies due to problems with railcars, especially in the western regions.

According to the state Customs Service, in my 2021/22, Ukraine exported 2.425 million tons of corn as of November 3, which is 199 thousand tons lower than last year's pace.

Lower world prices and increased corn supplies to ports will reduce purchase prices in the near future.