Wednesday, May 18

Corn Hits $8 a Bushel for First Time Since 2012 on Supply Woes


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(Bloomberg) — Corn futures in Chicago exceeded $8 a bushel for the first time in almost a decade, approaching a record high as war threatens global supplies, boosting demand for US grain.

The most-active contract rose as much as 2.6% to $8.04 a bushel with the conflict in Ukraine showing no signs of easing as Russian forces attacked Mariupol overnight.

The global outlook for corn supplies has taken a hit as Russia’s invasion of Ukraine disrupts farming and trade flows in a region responsible for about a fifth of exports. Not only that, but spring planting is also a worry now. That comes on top of a surge in fertilizer costs that’s dimming planting prospects in the US, the world’s top shipper. Demand is increasing as well. The US Department of Agriculture reported multiple sales this month of American corn to China exceeding 1 million tons.

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Prices haven’t touched $8 since September 2012, after devastating drought and heat damaged crops in the US Midwest. Futures are nearing an all-time high of $8.49 a bushel reached that same year.

“People are also watching closely China’s economy, covid lockdowns and demand for commodities, especially corn,” Naomi Blohm, senior market adviser at Total Farm Marketing in West Bend, Wisconsin, said in a note on Monday.

Ukraine’s next corn crop could fall almost 40% from last year, a local grain association said earlier this month. US farmers are poised to plant more soybeans than corn for just the third time ever as record fertilizer prices prompt growers to turn away from the cost -intensive grain.

Benchmark wheat futures in Chicago rose as much as 3.5% at $11.43 a bushel, as colder than expected weather across the Canadian Prairies and North Dakota threatened to slow planting.

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“We are not seeing a lot of warm temperatures and soil temperatures are not coming up as fast as they should. This will be a problem in May, if this trend continues,” David Tolleris, owner of WXrisk, said in a report.

Parts of Canada’s Prairies have 8-10 inches (20-25 centimeters) of snow on the ground after a spring storm, said Joel Widenor, meteorologist at Commodity Weather Group. Another storm is forecast to bring as much as 12 inches (30 centimeters) of rain and show to southeastern Saskatchewan and Manitoba this weekend, he said. The lows in Winnipeg may sink to 3 degrees Fahrenheit (minus 16 degrees Celsius) Monday, according to Environment Canada.

The start of planting in parts of the country may be delayed by a week to 10 days, said Ken Ball, a senior commodity futures adviser at PI Financial.

©2022 Bloomberg LP

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