Corn Prices Losing Streak Accelerates on Putin Promises of Releasing Ukrainian Corn Supplies

Corn futures prices were $0.03-$0.04/bushel lower on reports pushed by African leaders’ optimism that Russia will release Ukrainian corn supplies, though the reality is a little less truthful. Weather also impacted prices with weekend rains likely to encourage crop development. Corn prices finished the week down 6.5%, falling for the fourth consecutive time, the longest losing streak since the summer of 2020.

The selling has much to do with taking pressure off from the speculative surge on record corn export volumes and higher unit values. Total U.S. agricultural exports are expected to improve $7.5 billion to reach a record $191.0 billion.

US Corn Field
Corn Crop

Longer term corn prices remain underpinned by possible U.S. planting delays and Ukraine grain unavailable for export. Ukraine’s spring plantings are now 98% complete and will drop 25% from a year ago due to the ongoing Russian invasion, per the country’s agriculture ministry. That includes 10.304 million acres of corn.

Corn Futures Highlights

  • Corn dipped 6.5% for the week but is up 23% ytd
  • Futures prices ended Friday’s trading session $0.03-$0.04/bushel
  • Processors raised their cash bids for corn today across the Corn Belt. An Iowa originator reported light cash sales in the region Friday morning.
  • Cash bids were mostly flat at elevator, river terminal, and ethanol locations.

Corn Technical Outlook

Corn rally topped out at the highest since 2012 in Chicago at +1/8 and has corrected back to break the Tenkan. Support is at the Kijun 7/8 confluence. We also closed under the high from April 2021.

Corn Futures Weekly via KnovaWave

“Farmers are in a race against the clock to get their crops in the ground this week, with planting of corn, soybeans and wheat well behind their usual pace. Wet and cool temperatures in key parts of the Midwest have delayed farmers’ planting plans, leaving them days to get crops in the ground before they start to lose out on a bigger harvest. If they don’t, some grain traders say that already high prices for agricultural commodities could rise even more… The U.S. Department of Agriculture said 22% of corn was planted, compared with 50% for the previous-five-year average. For soybeans, 12% was planted, compared with the previous-five-year average of 24%, and 27% of spring wheat was in the ground compared with a typical 47%…”

May 11 – Wall Street Journal (Patrick Thomas and and Kurk Maltais):

Putin’s Promises

Russian president Vladimir Putin gave a nationally televised interview in Russia Friday and addressed issues of food security surrounding the Russian war in Ukraine. Putin called reports of Russia not allowing Ukrainian grain exports safe passage through the Black Sea “a bluff” and that “there are no problems with shipping grain out of Ukraine.”

Putin guaranteed safety for Ukrainian grain exports in the Black Sea and Azov Sea, encouraging shipments out of key Ukrainian export hub, Odessa.

Putin also suggested alternative exporting measures for Ukrainian grain, including by railway through countries neighboring Ukraine, including Russia’s key ally Belarus, as well as Romania and Poland, estimating Ukraine could potentially ship 184 million bushels of wheat and 276 million bushels of corn currently locked into storage.

“If someone wants to solve the problem of exporting Ukrainian grain – please, the easiest way is through Belarus. No one is stopping it,” Putin said. “But for this you have to lift sanctions from Belarus.”

Putin’s political goodwill with his country’s farmers is likely beginning to shake. He increased Russian grain export forecasts to 50 million metric tonnes (MMT) ahead of the largest Russian wheat crop expected to be harvested since the fall of the Soviet Union.

“The situation will worsen, because the British and Americans have imposed sanctions on our fertilizers,” Putin said in the interview, noting that higher global fertilizer prices are not correlated with Russia’s ongoing military occupation in Ukraine and calling for Western sanctions against neighboring Belarus to also be lifted. – Farm Progress

“We are now seeing attempts to shift the responsibility for what is happening on the world food market, the emerging problems in this market, onto Russia. This is an attempt, as our people say, to shift these problems from a sick head to a healthy one,” Putin said

Macky Sall, president of the West African country of Senegal, praised Putin’s comments for offering hope to African nations suffering from soaring food costs and growing scarcity.

“President #Putin has expressed to us his willingness to facilitate the export of Ukrainian cereals,” Sall, who is also the chairman of the African Union, wrote on Twitter.

We would suggest take these ramblings with extreme caution and take them for what they are, a propaganda piece. However, the rise and fall of grains prices are impacted with such reactions to his words.

U.S. EPA Blending Targets

The EPA released blending targets after the market close Friday. Biofuel blending targets for 2022 are forecast at 20.63 billion gallons, below the proposed volume. Retroactive adjustments for 2021 blending were above market expectations while 2020 volumes went unchanged.

The EPA added a 250-million-gallon supplemental standard to the 2022 blend mandates. It also denied 69 petitions for biofuel blending exemptions from refineries but will allow small refineries extra time to fulfill 2020 blending mandates.

Corn Plantings

Ukraine’s spring plantings are now 98% complete and will drop 25% from a year ago due to the ongoing Russian invasion, per the country’s agriculture ministry. That includes 10.304 million acres of corn, 2.292 million acres of spring barley and 466,000 acres of spring wheat.

In France AgriMer reports that 99% of the country’s 2022 corn crop has been planted through May 23. It also notes that 91% of the crop is rated in good-to-excellent condition, versus 93% in the prior week.

Corn Production

The Ukrainian Agribusiness Club estimates that the country’s total grain production will drop nearly 38% this season. That includes corn production sliding 39% lower to 1.012 billion bushels and wheat production dropping 44% to 661.4 million bushels. Ukraine is a significant exporter of both crops.

European Union grain trade association Coceral has slightly lowered its estimates for EU corn production this season to 2.598 billion bushels. That would be a year-over-year decrease of 1.8%, if realized.

Corn Exports

A USDA-ERS report shows U.S. corn exports in fiscal year 2022 are now forecasted to improve by $2.2 billion, reaching a new total of $19.1 billion “due to record volumes and higher unit values.

Total U.S. agricultural exports are expected to improve $7.5 billion to reach a record $191.0 billion.

Effect of Higher Input Costs on Farmers

A recent report by the Agricultural and Food Policy Center (AFPC) at Texas A&M University shows higher input prices are having a larger impact on farmers than originally thought.

  • Net cash farm income on the representative feed grain and oilseed farms is projected to decline by an average of $534,000 from 2021 to 2022 across the 25 feed grain and oilseed farms.
  • Representative wheat farms face an average reduction in net cash farm income of $399,000.
  • Representative cotton farms face an average reduction in net cash farm income of $716,000.
  • Rice farms face the largest reduction in net cash farm income per farm at $880,000 and a per acre reduction of $442.

Compiled by Joe Outlaw, Ph.D., and Bart Fischer, Ph.D., co-directors of the AFPC.

Commodity Round Up

  • Bloomberg Commodities Index was unchanged (up 34.9% y-t-d).
  • Spot Gold was little changed at $1,851 (up 1.2%).
  • Silver declined 0.8% to $21.93 (down 5.9%).
  • WTI crude jumped $3.80 to $118.87 (up 58%).
  • Gasoline surged 5.9% (up 91%),
  • Natural Gas declined 2.3% (up 129%).
  • Copper jumped 3.8% (unchanged).
  • Wheat dropped 10.2% (up 50%),
  • Corn fell 6.5% (up 23%).
  • Bitcoin gained $910, or 3.2%, this week to $29,680 (down 36%).

Source: TC, USDA, Farm Progress

From The TradersCommunity Research Desk