Rumors about China’s cancellation of contracts for Ukrainian corn have brought down purchase prices

The rapid increase in purchase prices for corn in Ukraine during the month by 13-14.5% from 5900-6100 to 6750-6900 UAH/t led to a decrease in offers from farmers, who, in anticipation of further price increases, sold corn only to replenish working capital. Part of the price increase was due to the devaluation of the hryvnia, as dollar prices in the Black Sea ports increased by 8-11% to 154-157 $/t.

On world markets, quotations grew on forecasts of a significant reduction in corn planting areas in the United States and amid unfavorable weather for the second crop in some states of Brazil.

However, on April 3, there were rumors on the market that China canceled the contracts for Ukrainian corn, after which some traders reduced the prices by 8-10 USD/t. However, there are experts who believe that traders are trying to boost sales by producers.

As it became known, China plans to increase the planting of high-yielding GMO corn varieties in 2024, and also offers importers to reduce the supply of grain to support the domestic market and stimulate the expansion of planting areas. The corn prices in Dalian fell from 2497 yuan/t at the end of February to 2407 yuan/t (337 $/t) at the end of March, but on the rumors of unofficial import restrictions rose again to 2455 yuan/t or 344 $/t.

In 2023/24 MY, Ukraine exported 19.13 mln tonnes of corn (22.4 mln tonnes last year) out of 24.5 mln tonnes forecasted by USDA. Farmers will sell the remaining volumes at maximum prices, as only those farms that do not need money and can wait to sell, especially given the higher prices for the new crop than for the old, have stocks left.

the may corn futures on the Chicago stock exchange for the week rose by 1.2% to 170,1 $/t, almost unchanged for the month and did not respond to rising oil prices by 4.5% per week, as well as forecasts of reduction of corn planting areas in the United States from 94.6 million acres last year to 90 million acres in 2024. At the same time, December futures rose by 2.1% to 185.8 $/t, which confirms the market’s belief that the planted area in the United States will still exceed 90 million acres.

In Brazil, in the main regions of cultivation of corn second crop reigns favorable weather, only in the state of Paraná there is a shortage of precipitation. Local agencies estimate the corn harvest in the current season at 125-130 million tons, although some lowered their forecasts to 115 million tons, and the USDA lowered its forecast of corn production in Brazil in 2023/24 MG by 2 million tons to 122 million tons.

Corn from Brazil will not enter the market before July, so Ukraine and Argentina will continue to compete with corn from the United States, especially in the Chinese market, which is trying to minimize the purchase price.

In 2023/24 MY, the EU decreased corn imports by 62% from 21.9 to 13.5 mln tonnes compared to the previous season, which restrains the demand for Ukrainian corn and increases its dependence on supplies to China.

Tags: Ukraine, China, corn, prices