Ukraine’s 2022-23 corn exports may reach 30mn t

Ukraine’s corn exports may reach 30mn t in the 2022-23 marketing season (October-September) if the grain corridor operates smoothly, according to local market participants, which significantly exceeds the latest projection from the US Department of Agriculture (USDA), meaning that this season’s global corn balance sheet may be looser than expected.

USDA currently projects Ukraine’s 2022-23 corn exports at 23.5mn t, with the country’s total supply of product at about 32.1mn t. The latter includes 5.1mn t of beginning stocks and this season’s output at 27mn t. Ukraine’s overall consumption is forecast at 6.2mn t in 2022-23, meaning that potential corn exports from Ukraine this season are limited to about 25-25.5mn t, given already low ending stocks for 2022-23 projected at around 2.4mn t.

Meanwhile, some local market participants and analysts believe that overall corn supply in Ukraine this season might be significantly higher than USDA currently estimates, because of the department’s understate figure for the country’s 2022-23 beginning stocks.

Extraordinary high domestic consumption figures in 2021-22

Low beginning stocks of at the start of this season in USDA’s balance sheet for Ukrainian corn is largely driven by unusually high estimates for domestic consumption in the previous season — at 10.9mn t, including 9.7mn t for feed purposes. These figures sharply contrast with the previous years, with the 2020-21’s levels standing at 7.1mn t and 5.9mn t, respectively (see chart).

USDA’s 2021-22 domestic consumption estimates for Ukrainian corn raise even more doubts amid higher-than-normal estimates for Ukrainian domestic wheat consumption for the same season at 10mn t, including 4mn t for feed purposes, compared with a respective 8.7mn t and 2.6mn t in 2020-21. This means that higher domestic corn consumption in the 2021-22 season was not related to a switch to corn from other feed grains in animal feed rations, according to USDA.

In addition, combined cattle and swine supply numbers in Ukraine fell in 2022 to 17.4mn heads from 19.1mn heads in 2021, with a further decrease to 15.3mn heads expected this year, according to USDA. As for poultry, total chicken meat supply in Ukraine fell to 1.32mn t in 2022 from 1.48mn t the previous year, with a slight rebound to 1.38mn t projected for this year (see charts). Judged by these figures, Ukraine’s 2021-22 domestic corn consumption in animal feed sector is unlikely to have exceeded the 2020-21’s levels.

Different estimates from USDA’s attache

In contrast to USDA’s official figures, the department’s Foreign Agricultural Service (USDA FAS) in December 2022 estimated Ukraine’s corn domestic consumption for 2021-22 lower at 6.50mn t. This figure is close to 6.86mn t projected for that season by Ukrainian agriculture.

USDA FAS’ estimates for Ukrainian corn beginning stocks also differ from the official USDA’s figures. For 2021-22 and 2022-23, USDA FAS estimates them at 2.7mn t and 11mn t, respectively, compared with only 830,000t and 5.1mn t under USDA, with the gap between USDA FAS’ and USDA’s estimates driven by different figures for domestic consumption.

While Ukraine’s statistical service suspended publishing official grain stocks in February 2022, market participants believe that USDA FAS’ estimate of Ukraine’s 2022-23 beginning stocks of corn is closer to reality. “Ukraine might have had about 9mn-10mn t of corn stocks at the start 2022-23, as domestic consumption last season is unlikely to have surpassed the previous year’s level, while losses were below 1mn t. This means that total supply of Ukrainian corn this marketing year can reach 36mn-37mn t, with production around 27mn t,” a grain trader from one of Ukraine’s largest trading firms told Argus.

More corn to global market

Ukraine’s corn exports totalled 13.4mn t in October 2022-February 2023, with average monthly volumes at 2.7mn t, according to customs data.

If higher beginning stocks for 2022-23 at about 10mn t are confirmed, Ukraine’s corn exports this season may reach and even exceed 30mn t at the current export pace. This may potentially allow the country to supply additionally at least 5mn t of product to the global market provided smooth operation of the grain corridor.

“We believe we could export up to 30mn t of corn this season. If the grain corridor continues to operate, we will find demand for Ukrainian corn,” the trader told Argus.

Tags: Ukraine, corn