Corn prices in Ukraine are rising, but they are held back by a seasonal increase in supply

Purchase prices for Ukrainian corn are increasing, but it remains the cheapest on the world market, which puts pressure on the prices of American corn, especially against the background of falling oil prices.

The agreement on "grain corridors" was signed for a period of 120 days, and the chances of an automatic extension are low, given the statements of the Russian Federation that they have not canceled export sanctions. This prevents traders from increasing their purchases and limits prices.

The increase in corn supplies through the ports of Ukraine against the backdrop of active grain exports from Brazil is putting pressure on corn quotes in the United States. The situation is worsened by the drop in demand for ethanol, which is becoming cheaper after oil and gasoline.

During the week, purchase prices for fodder corn in the ports of Ukraine increased by $10-15/t to $175-200/t. The resumption of Black Sea ports has reduced the volume of deliveries to the Danube ports, where purchase prices are the same, but delivery costs are $10-15/t higher.

Demand prices for deliveries to the DAP-western borders also increased by $15-20/t to $240-260/t, which continues to keep a large number of grain cars in queues and prevents carriers from reducing the cost of rail transportation.

December futures on the Chicago Stock Exchange rose 1.5% to $266.1/t yesterday, losing 1.1% for the week and adding 11% for the month, on expectations of a new USDA report on US corn production.

In August, the USDA estimated US corn production in 2022 at 364.7 million tons, but Pro Farmer later lowered its forecast to 349.5 million tons, IHS Markit to 356.6 million tons, and Barchart kept its estimate at 367.1 million tons. However, such a discrepancy in estimates supports prices.

During the last week of the season, the US exported 518.3 million tons of corn, and in general in 2021/22 MR - 55.2 million tons, which is 13% less than the USDA forecast of 62.6 million tons.

On Monday, September 12, the U.S. planted and harvested acreage reports will be released, along with updated USDA balance sheets, which will determine corn price trends for the coming months.