US tariff uncertainties drive demand for Ukrainian corn

The potential imposition of tariffs by the incoming Trump administration in the US has sparked increased demand for Ukrainian corn, and uncertainties surrounding a potential trade war between the US and China have contributed to this trend, according to sources.

US corn has recently become the most competitive option for the EU market, particularly with the onset of the new season, which has significantly affected demand for Ukrainian corn. Additionally, surging corn prices in Ukraine in October reduced its competitiveness in the EU market, where it has been overtaken by an influx of US grain.

A Spain-based trader described US origins as “the drivers in the market.”

However, following Donald Trump’s victory in the US presidential election, traders have noted increasing concerns among EU corn importers regarding the potential imposition of tariffs and the uncertainty it raises for trade. This uncertainty has encouraged buyers to source corn from Ukraine despite the competitive US pricing.

“The Europeans are afraid there will be an import duty in the US, or an export duty in the US, leading to potential losses or even the inability to secure cargoes,” a Ukraine-based trader said.

A corn buyer at a feed mill in the Netherlands said: “At this moment, the Black Sea is probably the cheapest origin because people are concerned about what will happen with the US once Trump takes office and potentially imposes tariffs.

“Nobody knows how substantial the tariffs will be or how quickly the EU can implement them,” the buyer said.

By mid-November, EU importers had shifted their interest significantly toward Ukrainian corn.

A Spain-based buyer of corn said the EU only buys non-GMO corn from Ukraine.

Offers for Ukrainian corn to Spain have been reported at $234/mt CIF Spain Mediterranean, while bids stood at $230/mt. A Spanish importer noted that offers for US corn were reported at $232/mt CIF Spain Mediterranean. While US corn is the cheaper option, the geopolitical uncertainties mean Ukrainian corn is now being preferred.

A similar trend is emerging in the Chinese market. Market participants said a potential trade war between the US and China could also lead to a shift in sourcing for the Chinese market from the US to Ukraine.

“It could have a potentially positive impact on the flow of corn from Ukraine to China, as well as on other products, like meal and barley,” a Ukrainian trader said.

Traders said they anticipate increased demand for Ukrainian corn from the Asian market in the coming year, particularly China.

“Ukraine should focus on China if they need corn for January and February,” another Ukraine-based trader said.

Amid growing geopolitical tensions and the resulting shifts in demand from destination markets, market participants expect a gradual increase in prices by the beginning of the new year. Prices are currently low despite high purchasing costs at ports, attributed to a lack of strong demand toward the end of the year.

Platts, part of S&P Global Commodity Insights, assessed Ukrainian corn FOB POC at $212/mt on Dec. 3. That is down from $222/mt on Oct. 10, a decline of 4.5% in nearly two months. Platts also assessed US corn FOB US Gulf Coast at $203.25/mt on Dec 3. That is down from $206.5/mt on Oct. 10, a decrease of 1.5% over the same period.

Tags: USA, Ukraine, China, corn, EU, prices