Corn price outlook amid heightened demand for US produce

Corn price has been trading within a horizontal channel for close to two weeks now as investors remain keen on the progress of Russia-Ukraine talks. However, lack of a breakthrough in the negotiations, coupled with the disruption of fertilizer shipments and weather woes, will likely sustain US corn above $7 per bushel.

Russia-Ukraine crisis

Corn price has held steady above $7.00 per bushel as the Russia-Ukraine war heighten supply concerns. On 24^th February, the day when news of Russian attack on Ukraine emerged, CBOT corn futures surged above this critical level for the first time since June 2021. Granted, it momentarily dropped below  that level before bouncing back.

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About two weeks ago, corn price surged to its highest level since September 2012 at $7.81. Upon easing from this multi-year high, it has been trading within a range of $7.26 and $7.67 for close to two weeks now. At the time of writing, US corn futures were at $7.58 after hitting an intraday low of $7.29 on Thursday.

In the ensuing sessions, the bulls will likely remain in control as China ramps up US corn purchases. China is a key recipient of Ukrainian corn. Indeed, in 2021, the east European country took US position as China’s leading corn supplier. However, the Russian invasion has disrupted grain exports from the region. Besides, the ongoing war has raised concerns over the spring corn planting season in the country.

Data released by the US Department of Agriculture (USDA) in the past week indicated that China, which is the global leader in imports, purchased 200,000 tonnes of US corn in the week ending on 11^th March. The shipment, which is scheduled for the season set to commence at the beginning of September, it the largest since December.

Granted, the purchase was the fourth-largest in that week. US corn sales to different destinations across the globe exceeded 2 million tonnes despite the soaring prices. The International Grain Council (IGC) has adjusted its outlook of global exports to the downside with no end in sight for the Russia-Ukraine crisis. In particular, it has reduced its estimates of global corn exports by 6 million metric tonnes to 173 million metric tonnes.

In addition to the Russia-Ukraine war, weather woes in South America and disruptions of fertilizer shipments have continued to boost corn price. Brazil’s weather conditions for the period between April and May will be critical for the corn market.