Reduced export demand lowers corn prices in Ukraine

Favorable weather conditions for wheat and corn crops in the US, Brazil, the EU and Ukraine, as well as the start of wheat harvest in the US, are increasing pressure on quotes in Chicago, which is significantly reducing demand in the physical market.

Since the beginning of June, Ukraine has seen a decline in export demand for feed grain, in particular for old-crop corn, as the main buyer, Turkey, has begun harvesting its own fairly good harvest of wheat and barley.

Export demand prices for corn in Ukraine decreased by another $8-10/t to $215-218/t over the week, and hryvnia prices decreased by 350-400 UAH/t to 10,900-11,000 UAH/t with delivery to Black Sea ports.

The sharp increase in the dollar exchange rate against the hryvnia on the interbank market by 1.5% over the past 7 days allows traders to keep prices in hryvnia higher, which partially compensates for the sharp drop in currency prices.

The decline in prices for the new barley crop to $200-204/t and feed wheat to $208-212/t also put pressure on corn prices.

In Ukraine, 4.367 million hectares, or 99% of the planned area, have already been sown with corn, and favorable weather in May and the first half of June contributes to the formation of a good harvest.

Abundant precipitation with low temperatures in the US corn belt is improving the condition of corn crops, which, against the backdrop of rains forecast for next week and a gradual decline in oil prices (-5.2% per week, -13.5% per two weeks), is leading to a further decline in corn quotes in Chicago.

Over the past 7 days, July corn futures in Chicago fell by 2.6% to $164.2/t (-13.3% for the month), and December futures fell by 3.1% to $175.6/t (-11.4% for the month).

According to NASS Crop Progress, as of June 7, 97% of the planned area has been sown with corn (96% on average over the past 5 years), and 86% of the area has sprouted (86% on average). 67% of the corn crop is now in good or excellent condition (71% last year).

The drought season in central Brazil has ended, and rains began there last week, which will continue this week and improve the condition of the second corn crop, so in today’s updated world balance, the USDA may increase the harvest forecast for both Brazil and Argentina.

In Argentina, corn has already been harvested on 40% of the area, and due to the high yield, production forecasts have been increased to 64 million tons (compared to 50 million tons last season), so importers are actively switching to purchasing a new crop, the prices for which are $230-235/ton FOB, while Ukrainian corn is offered at $235-238/ton FOB.

Exporters’ demand for corn at Ukrainian ports will remain in June and July, and farmers’ suspension of active sales may lead to speculative price spikes at ports as contract deadlines approach. But in August, competition with Argentine and Brazilian corn will intensify on the market, so traders will not be able to sell significant consignments from Ukraine, and some corn will remain for the next season.

Tags: Ukraine, corn, prices