Reducing harvest forecasts in South America and blocking exports from Ukraine supports corn prices

Due to Russia's military aggression and the blockade of ports in Ukraine, a significant amount of corn will remain unexported in the coming months, which keeps prices for the next contracts at a high level. And declining yields in South America and forecasts of declining production in the United States and Ukraine due to reduced sowing areas are contributing to higher futures prices for the new harvest.

Increased exports across the western border and low capacity of crossing stations have led to queues of wagons and the introduction of a convention on rail transport of corn to western stations. Trucking makes it impossible to run out of fuel and wait 15-20 km for trucks to leave Ukraine, as customs has not simplified travel procedures, and veterinary control by the EU has also been going on for a long time.

Demand prices for Ukrainian corn supplies in May-June remain at last week's level due to deliveries under previously concluded agreements:

• border with Poland DAP Izov - 235-250 $ / t, DAP Yagodyn - 235-240 $ / t,
• border with Slovakia DAP Chop 250-260 $ / t,
• the port of Constanta (Romania) $ 285-300 / t,
• port of Reni (Ukraine) $ 235-245 / t.

May futures for Black Sea corn in Chicago fell another 4.9% to $ 338.5 / t, losing 7.6% for the month, and November fell by only 1.5% to $ 330 / t.

Analysts predict that USDA experts in the May report will reduce the forecast for corn production in Argentina by 1.3 million tons to 51.8 million tons, and in Brazil - by 2.4 million tons to 113.6 million tons due to the early start of the hot period. Local agencies have already lowered production estimates for Brazil: IHS Markit - by 3 million tons to 115 million tons, Ag Rural - by 5 million tons to 112.3 million tons, Safras and Mercado - to 105 million tons.

July futures for US corn fell 2.3% to $ 305 / t for the week, and December futures fell 2% to $ 283 / t, almost the same as in April, and have not yet responded to delayed sowing due to rain and cold. weather.

According to the NASS USDA, as of May 8, corn in the United States sown 22% of the area compared to 64% last year and 50% on average over 5 years, which is the worst figure since 1990/91 MY. If the rate of sowing does not accelerate, the pressure on prices will increase.

Exports of corn from the United States for the week of April 29 - May 5 fell by 20% to 1.39 million tons, and in total in the season reached 37.9 million tons from the projected USDA 63.5 million tons, which is 22% lower than last year.

In France, as of May 2, 84% of the area was sown with corn (+ 24% per week), which is slightly lower than last year's 87%. But the UIC expects corn sowing to be reduced by 5.9% to 1.46 million hectares due to high fertilizer prices.

June corn futures on the Paris Stock Exchange for the week increased by 2.8% to 359.5 € / t or $ 378.7 / t, and November - by 4.2% to 343.75 € / t or 362 $ / t.