Increased corn supply increases pressure on purchase prices in Ukraine
Ukrainian farmers have almost completed corn harvesting and increased sales, which immediately led to an increase in queues of trucks in ports and lower prices under supply pressure.
Purchase prices for corn decreased in ports to 2 258-260/ton or UAH 7950-8100/ton for deliveries in December and.260-262/ton for deliveries in January.
Traders have almost purchased the volumes necessary to fulfill the nearest contracts, so they do not offer additional premiums for fast delivery. Improving rail transportation from grain elevators activates deliveries under previously concluded agreements. Due to the increase in the number of road traffic in ports, queues are formed for 1-3 days.
The fall in oil prices did not significantly affect the corn market, as traders record increased demand from the ethanol industry in the United States and hope for an increase in export demand in the near future. However, China, which is the main buyer of American corn, still prefers more expensive Ukrainian corn due to the lack of GMOs in it.
December Black Sea corn futures on the Chicago Stock Exchange at the end of November for the week fell by 4.9% to 2 266.5/ton, but over the past week recovered by 3% to.274.5/ton,supporting prices on the physical market in Ukraine.
December futures for US corn in Chicago in the same period fell only 3.3% to 2 223/ton, and since the beginning of December rose 3.2% to.230.3/ton, which corresponds to the highest level since July.
Corn exports from the United States for the week of November 26 – December 2 decreased by 5.8% to 758.2 thousand tons, and in general in the season reached 9.4 million tons, which is 19% lower than last year’s pace. To reach the USDA forecast of 63.5 million tons over the next 9 months, the country must export 6 million tons monthly or 1.4 million tons Weekly, which looks unrealistic against the background of an increase in the harvest in South America.
Analysts expect the U.S. export forecast to be lowered and inventory estimates raised in a December USDA report, adding to price pressures.
January corn futures on the European Exchange Euronext since the beginning of December rose by 4.2%, returning to the level of the end of November – 247.25 25 €/ton or 279.16 € /ton, despite the tightening of quarantine restrictions in the EU countries and forecasts of a decrease in the consumption of oil and, accordingly, biofuels.
In Brazil, according to AgRural estimates, as of December 2, 94% of the area was sown with corn of the first harvest, compared with 96% on the same date last year.
The market is waiting for the completion of sowing in Argentina, where according to the Buenos Aires Grain Exchange, 31.1% of corn is sown, and forecasts of sowing areas have been increased from 7.1 to 7.3 million hectares. The lack of precipitation still hinders sowing and development of crops, but Brazil receives enough precipitation, so traders ‘ attention in the coming months will be focused on the weather in South America.
Taiwan’S MFIG Group purchased 130 thousand tons of Argentine corn for delivery in February at a price of 3 314-319/ton C&F, while American corn was offered at 3 335/ton C&F, and South African corn – at 3 330/ton C&F.
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