Corn stock prices have not yet reacted to the lower crop forecast in Ukraine

The extreme heat and lack of rain have a negative impact on corn crops, which are entering the critical flowering and harvesting phase, so market participants are lowering their production forecasts. Analysts of the agricultural cooperative PUSK at the Ukrainian Agrarian Council expect a repeat of the situation in 2020, when the drought caused a 35% decrease in sunflower and corn harvest.

Yesterday, the northern regions of Ukraine experienced long-awaited showers that will spread to the southern and eastern regions and reduce air temperatures from 35-40°C to 30-32°C. However, the scattered rains will not be able to replenish soil moisture reserves.

The heat also has a negative impact on corn crops in Romania, Bulgaria and Russia, which has already led to higher prices for black sea corn of the new harvest, although it did not affect the quotes in Chicago.

According to the State Customs Service, in 2024/25 MY (as of July 17), Ukraine has already exported 1 mln tonnes of old crop corn, compared to 728 thsd tonnes last year. The country will enter the new season with the lowest corn stocks in the last three years, which increases export demand for the grain. Forward prices for corn deliveries in October-November to the Black Sea ports increased from 160-165 USD/t to 170-175 USD/t.

December corn futures in Chicago for the month fell by 12.8% to 162,1 $/t amid increasing planting areas and production forecast in the United States. Weather improves the condition of crops, and on July 14 in good or excellent condition was 68% of crops (57% last year), and in the flowering phase entered 41% of crops (32% on average for 5 years).

The EIA report did not support the quotes, although for July 6-12, ethanol production in the US increased by 52 thousand barrels to 1.106 million barrels/day, and its reserves decreased by 443 thousand barrels to 23.16 million barrels. This week was the second largest amount of corn used for ethanol production in the history of the United States.

Increased supply of corn from South America also puts pressure on prices. According to AgRural, as of July 11, Brazil’s second crop corn was harvested on 74% of the area (36% last year), so in July, grain exports will increase significantly. The National Association of Corn Exporters Anec increased the forecast of corn exports in July from 3.4 to 4.09 mln tonnes.

Recall that in Brazil, the production of corn of the second harvest accounts for 75% of the total grain production, which, according to Safras&Mercado, in 2024 will amount to 125.56 mln tonnes (140.06 mln tonnes in 2023), which is significantly higher than the July USDA forecast of 122 mln tonnes. At the same time, the corn exports will decrease from 54.59 mln tonnes to 40.18 mln tonnes in comparison with 2023.

Tags: Ukraine, Russia, Romania, Brazil, prices, Black Sea region, drought, USA