High logistics costs widen regional price gap in Ukraine’s corn market

Corn producers in eastern Ukraine are facing the strongest logistics pressure due to the considerable distance from the country’s western borders. High rail transportation costs are limiting marketing options and directly affecting purchase prices, according to analysts at PUSK.

The regional price gap has already reached UAH 700–1,000/t. Elevator prices in central Ukraine are around UAH 6.5 thsd/t, while in the east they are mostly at UAH 5.5–5.8 thsd/t. At ports, large corn lots are priced at approximately $170–180/t.

Due to the high cost of transportation to the western border, the Danube could remain an alternative route for producers in eastern Ukraine. Another option is selling corn to domestic processors. At the same time, more attractive price levels that were previously available to farmers are gradually disappearing from the market.

Additional pressure could emerge as harvesting accelerates. PUSK estimates that Ukraine’s corn crop may exceed 30 mln t, while supplies of new-crop grain to the market are expected to increase sharply from around September 20–25.

No significant weather risks for corn are currently observed, so a large share of the new crop could arrive with standard quality parameters and require little or no additional drying. This could accelerate deliveries to elevators, ports and western border crossings, making the logistics system’s ability to handle the increased volumes one of the key factors for the market.

Tags: logistics, Ukraine, corn, prices