man hands with grain, on brown corn background

Corn Price fell from its highest in 9 years of $8.20 per bushel when the week started with increased profit-taking mode in the market, yet CBOT futures are stable above $8.00. Last week, it was below the same level since September 2021, and it’s currently trading at $8.06 per bushel.

Bullish Catalysts

Both Russia and Ukraine are significant corn exporters, and their current crisis has caused supply challenges and hiked corn prices. Moreover, the western US drought and increased crude oil prices have further pushed the rallying.

Last week, in his announcement, President Biden confirmed a temporary waiver of the policy that stops selling higher ethanol blend gasoline in summer. This decision seeks to decrease gasoline prices, particularly during summer’s high demand, and increase Ethanol’s demand. In return was a further increase in the corn market since a third of corn grown in the US, for example, is used in producing Ethanol.

Additionally, hiked fertilizer prices and scarcity have affected corn prices. Before the Ukraine crisis in late February, farmers had challenges with increased farm input costs regardless of the prolonged supply chain obstacles. But, the Europe crisis made the situation worse. Input prices are currently at their highest, with a 30% increase since the year started. Since 2020, nitrogen fertilizers costs have hiked four times while Potassium and Phosphorus have increased thrice.

Russia is the leading exporter of nitrogenous fertilizers globally and the second-largest phosphorous and potassium fertilizers supplier. In total, the country owns about 14% of fertilizer exports worldwide. With the West’s sanctions, the market has closed the country out.

Moreover, natural gas is significant in the fertilizer sector. Hence, the hiked natural gas costs have steered increased fertilizer and corn prices. When the week began, US natural gas futures went up to the highest since October 2008 at $8.19 per British thermal unit. Ever since, it has currently dropped to $7.28

Therefore, the increased price of inputs has led US farmers to turn to soybeans more than corn, which uses less fertilizer. According to the US Department of Agriculture, this is the second time ever that Soybean acreage will surpass that of corn.

The agency’s Prospective Plantings reports show a drop of corn acreage by 3.9 million acres to 89.5. on the other hand, Soybean is predicted to have a 3.8 billion acres increase to 91million acres. This report affected corn prices, with investors predicting a further drop in investors for 2022/2023.

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