Corn Hovers at Decade High as War, Weather Stoke Supply Fear

(Bloomberg) -- Chicago corn futures are hovering close to a decade high reached earlier Tuesday as the war in Ukraine curtails grain sales and weather hampers crops elsewhere. 

Ukraine’s president said Russian forces had begun a new campaign to conquer the Donbas region in the east. The crisis has obstructed shipments from the Black Sea region, a major hub of corn and wheat exports.

That’s heightened attention over the status of other exporters’ crops, which are being sown or in the midst of their growing season. Early U.S. corn plantings are trailing the average pace, and wheat conditions are waning as drought grips the Plains. Plus, parts of Brazil’s winter-corn region are adversely dry.

Corn futures for July delivery made new highs overnight, then fell as traders sell to take profits. 

“The market is extremely overbought and is due for a correction,” Naomi Blohm, senior market adviser at Total Farm Marketing in West Bend, Wisconsin, said in a note on Tuesday.

Corn futures on the Chicago Board of Trade fell 0.9% to $7.995 a bushel at 11:25 a.m. local time. A close above $8 is viewed as technically significant, and will support prices.

Ukraine is ramping up crop shipments by rail given that most of its seaports are closed. Still, cars are facing multiweek logjams at the border as the infrastructure isn’t sufficient for the increase in traffic, according to analyst UkrAgroConsult. 

Moreover, a third of the country’s farmland could go unharvested or unsown this year amid the war, the United Nations estimates. 

Wheat futures in Chicago also eased 1.5% to $11.115 a bushel, while the Paris contract climbed 0.8% to 404.25 euros ($435) per ton. That’s near its all-time high set in early March.

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