The main reason for the fall in prices throughout the week had to do with the talks that have taken place in the sense of opening a humanitarian corridor so that Ukrainian ships can resume exports of their grains for humanitarian purposes through the Black Sea
There is a popular saying that everything that goes up must come down, and in the case of corn, after many months of sustained increases, even triple digits, we have been falling for a little over a month, but last week it simply collapsed , which represents a serious situation for the producers of our country, since the production costs do not go down and it is not seen when they can go down.
Just to give you an idea, the price of corn quoted on the Chicago Futures Exchange for July, which is the one used as a reference by our corn producers in Sinaloa in this Fall-Winter cycle, has lost since April 29 of this year, in which it reached its maximum price of 320.26 dollars/ton, at the close of last Friday 34.05 dollars/ton, equivalent to a drop of 10.63%: however, in this short week due to the holiday in the United States In the United States, corn fell 6.46% or 19.78 dollars/ton, to settle at levels of 286.21 dollars.
Undoubtedly, the foregoing is not good news, much less so when production costs do not decrease as a result of the increases that have been seen in the price of energy and that have a direct impact on the price of agrochemicals and fertilizers, as well as in transportation costs.
In fact, if we compare the behavior of the price of oil in the same period in which corn prices have fallen, oil has gone from 104.69 dollars/barrel to 118.87 dollars at the close of Friday, which is equivalent to an increase of 13.54 percent.
In the case of the price of natural gas, it has increased between April 29 and last Friday by 17.66%, having gone from 7,244 to 8,523 dollars/MBtu.
The main reason for the fall in corn prices over the past week had to do with the talks that have taken place in the sense of opening a humanitarian corridor so that Ukrainian ships can resume exports of their grains for humanitarian purposes. through the ports they have on the Black Sea.
The interesting thing is that the Russians have declared that they are in the best position to make this happen, but that the Ukrainians would have to be responsible for removing the mines from their ports, which seems unlikely.
For now, this coming Wednesday, June 8, Russian officials will meet with representatives of the UN and Turkey to discuss the issue and there will be greater clarity on it. We will have to wait to see what finally happens.
Meanwhile in the United States, the report on sowing progress indicated that 86% of the area has been sown, which reflects a clear delay compared to the average of previous years, where at this point it is practically 100% of the planted area, which will undoubtedly cause production areas in the Dakotas and Minneapolis to take advantage of the Preventive Planting program, in which producers collect agricultural insurance for the impossibility of planting due to weather problems; however, it is important to note that more corn than usual has been planted in the heart of the Midwest.
Undoubtedly, the weather has played a very important role in planting this cycle, which could be interpreted as bullish given the delay in planting and the probable decrease in the planted area; however, good weather is expected with rains and warmer temperatures that could help improve corn yields.
With tight inventories in terms of energy and with good prospects for corn production, the outlook seems very complicated, since it means higher costs for producers with lower incomes, and to spice things up, in the case of our producers, the strength that we have seen in the peso in recent times, does not help them at all because corn is a product that is priced in dollars.
How price hedges are needed!