Corn Exceeds $8 A Bushel For First Time In Decade On Shortage Fears

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by Tyler Durden
Monday, Apr 18, 2022 - 11:25 PM

A combination of factors has sent corn futures in Chicago to the highest level in a decade as investors fret over dwindling supplies. 

Corn futures haven't exceeded $8 a bushel since September 2012, following a devastating drought that damaged crops across the U.S. Midwest. Now supply risks return but for different reasons. 

The global outlook for corn supplies has plunged since Russia's invasion of Ukraine began in late February. The war-torn country supplies a fifth of the world's corn and could experience a 50% decline in output this year

Soaring fertilizer costs have forced some farmers in the U.S. to increase plantings of soybeans this growing season versus corn as the crop requires fewer nutrients. 

Fertilizer prices are at record highs because of rising natural gas costs and Russia limiting fertilizer exports to 'unfriendly' countries. Russia is one of the biggest exporters globally -- the U.S. just so happens to be a large importer of nitrogen and potash from Russia. 

And the latest development pushing corn prices to the stratosphere is the Biden administration's announcement of emergency measures last week to expand biofuel sales to curb soaring gasoline prices. The problem with this move is that the ethanol industry absorbs a larger share of the corn crop, which would curb supplies to the food industry. So ultimately, it would increase prices. 

This is happening as global food prices jumped a stunning 12.64% MoM in March - almost double the previous record monthly surge...

Global food prices have exceeded levels only seen during the inflation riots of 2010/11, known as Arab Spring. 

Investors appear to be pricing in a corn shortage. It's never been a better time to start growing your own garden