The increase in the import of corn to the EU reduces its prices in Ukraine

USDA experts predicted that due to a decrease in corn production in 2022/23 compared to the previous season from 71 to 54.2 million tons, EU countries will increase its import to 21.5 million tons (19.8 million tons in 2021/22 and 14.5 million tons in 2020/21 MR). However, the pace of deliveries suggests that actual imports will significantly exceed forecasts.

According to the European Commission, from July 1, 2022 to January 22, 2023, the import of corn increased by almost two times compared to the same period last year – from 8.9 to 16.1 million tons. Supplies from Ukraine increased from 4.2 to 7.49 million tons (although the share in European imports fell from 47.1% to 46.4%), from Brazil – from 3.2 to 7.3 million tons (the share increased from 36.2% to 45.4%).

Ukrainian corn is interesting for European buyers due to its low price, so forecasts of closing the corn deficit with surpluses of European fodder wheat have not come true yet.

Despite difficulties with deliveries through Black Sea ports, Ukraine exported 14.4 million tons of corn in the 2022/23 financial year as of January 23 (with the USDA forecast of 20.5 million tons), compared to 14 million tons last year. If the pace of shipments does not change, Ukraine will be able to export another 5 million tons by the end of March, when the grain agreement expires.

Representatives of Ukraine and Turkey report that the grain agreement will probably be extended. In addition, the possibility of exporting not only grain, but also ore and metal, which will support the economy of Ukraine, is being discussed.

Demand prices for Ukrainian corn decreased to $205-225/t with delivery on DAP – western borders. However, the growth of the euro against the dollar to the level of 1.09 $/€ may strengthen demand, as it is more profitable for European processors to buy cheap Ukrainian corn for dollars, rather than expensive feed wheat for euros inside the EU.

Demand prices for corn for delivery to Black Sea ports remain at the level of $206-210/t, as the approach of ships is severely delayed, and power outages have led to a halt in receiving cars and loading ships at the ports. This increases the downtime of ships, wagons and trucks and, accordingly, losses for manufacturers and traders.

March corn futures on the Chicago Mercantile Exchange fell 0.9% to $265.7/t on the week as the weather improved in Argentina, but they were weighed down by weak US exports.