Rumors about the cancellation of contracts for Ukrainian corn by China collapsed the purchase prices

The rapid increase in purchase prices for corn in Ukraine during the month by 13-14.5% from 5,900-6,100 to 6,750-6,900 hryvnias/ton led to a decrease in offers from farmers who, in anticipation of further price increases, sold corn only to replenish working capital. The increase in prices was partly related to the devaluation of the hryvnia, as dollar prices in the Black Sea ports rose by 8-11% to $154-157/ton.

On world stock exchanges, quotations rose on forecasts of a significant reduction in the area of corn sowing in the USA and against the background of unfavorable weather for sowing the second crop in some states of Brazil.

However, on April 3, rumors appeared on the market about the cancellation of contracts for Ukrainian corn by China, after which some traders lowered prices by $8-10/ton. But there are experts who believe that in this way traders are trying to activate sales from manufacturers.

As it became known, in 2024 China plans to increase the sowing of high-yielding GMO varieties of corn, and also offers importers to reduce grain supplies in order to support the domestic market and stimulate the expansion of sowing areas. Dalian corn prices fell from 2,497 yuan/t in late February to 2,407 yuan/t ($337/t) in late March, but rebounded to 2,455 yuan/t or $344/t on rumors of an unofficial import cap.

In 2023/24, Ukraine exported 19.13 million tons of corn (22.4 million tons last year) out of USDA's forecast of 24.5 million tons. Farmers will sell the rest of the volume at maximum prices, as stocks remained only in those farms that do not need much funds, and which can wait with sales, especially given the higher prices for the new crop than for the old.

May corn futures on the Chicago Stock Exchange were up 1.2% for the week at $170.1/t, largely unchanged for the month and not reacting to a 4.5% weekly increase in oil prices, as well as forecasts of a decline in the US corn planting area from 94.6 million acres last year to 90 million acres in 2024. At the same time, December futures rose 2.1% to $185.8/t, confirming the market's belief that acreage plantings in the US will still exceed 90 million acres.

In Brazil, favorable weather prevails in the main regions for the cultivation of second-crop corn, only in the state of Paraná there is a deficit of precipitation. Local agencies estimate the corn crop for the current season at 125-130 million tons, although some lowered their forecasts to 115 million tons, and the US MSG lowered its forecast for Brazilian corn production in FY 2023/24 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 USA, especially in the Chinese market, which is trying to reduce the purchase price as much as possible.

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