The Chicago Board of Trade Corn prices averaged over $782/tonne in April, the second highest monthly price on record. The surge in corn prices this year is undoubtedly linked to the Ukrainian conflict as traders speculate on potential corn shortages later this year; however, world prices have been rising for some time as corn prices rose 54% y-o-y in Q121. Higher, in fact, than this year’s equivalent 25% y-o-y uplift.

Ukraine supplied 25 MMT (16%) of global corn shipments in 2021. With Russia effectively blocking all Ukrainian ports there is little likelihood of further exports soon, though this week a Panamax left Constanza with Ukrainian corn destined for Spain. Evidence shows there has been some planting of corn in recent weeks by Ukrainian farmers but most of this corn will likely be for domestic consumption. So, looking at where replacement corn may be sourced later this year, it appears that increased supplies will come from Argentina and Brazil mostly in the second half of 2022.

The USDA forecasts Argentina’s 2021/22 crop up 6 MMT (+16%) y-o-y to 42.5 MMT and Brazil’s corn crop up 5 MMT (+18%) to 32.5 MMT. With its pig herds now back at pre–African Swine flu levels and on the back of last year’s positive domestic harvest, China is unlikely to require the same volume of corn later in the year. However, many major European buyers, such as Netherlands, Spain, and Italy, purchase at least half of all corn imports from Ukraine. Significant amounts of corn are also imported from Ukraine by Turkey, Egypt, and Israel. Thus, additional corn shipments to Europe and the Eastern Mediterranean could provide a timely second half tonne-mile boost to the Atlantic grain market from these longer haul potential shipments.