Atria Brokers experts explain why corn prices are falling and export demand for wheat is decreasing

Atria Brokers broker Natalia Levkonyuk told Latifundist.com why large CIF/FOB contracts for Ukrainian wheat have almost disappeared, and corn prices have fallen from $211-212/t to $203-204/t in a few weeks. She explains this by problems with logistics, shelling of ports, high cost of road transportation and the strategy of large players to "sit out" the situation.

Problems with rail transportation greatly complicate exports. Previously, wagons from central Ukraine took 3-5 days to reach the ports, but now it can take up to 2-3 weeks, although there has been some improvement in recent days. Cars reach the ports in 1-2 days, but they are difficult to find, since most of the transport is used for collection and processing. In addition, constant alarms, shelling and lack of electricity create queues at the ports.

All this has led to an increase in the cost of transportation from 1.5 UAH per ton-kilometer to 3-3.5 UAH. At the same time, many drivers refuse to go to the port.

Previously, traders who were short of goods for shipments offered bonuses for fast deliveries on CPT or DAP. However, these bonuses have now almost disappeared, as it is difficult to unload quickly at ports, and traders hardly contract new shipments on CIF and FOB.

Large companies with their own elevator networks often pay prices on the domestic market 3-5 $/t higher than the equivalent in ports. Farmers do not need to waste time in queues or freeze funds, the delivery distance is reduced (100-200 km from the farm), and traders load warehouse capacities, accumulating the necessary volumes.

The logic of large multinational companies is simple - they expect that in January-February the cost of transportation will decrease, and then it will be possible to export products. However, if large traders can keep stocks for half a year, then small and medium-sized companies are in a difficult situation, calculating whether to keep teams after the New Year. The general logic is this - it is better not to lose what you have than to earn a few dollars and take all the risks.

Against this background, corn prices in ports have dropped sharply – from $211-212/t a few weeks ago to the current $207-208/t, and after the recent shelling to $203-204/t. Buyers are not willing to pay more for goods that will not go anywhere anyway.

The situation with wheat is even more complicated, as the Russian Federation is actively dumping on the markets of Egypt and Turkey, selling wheat with better protein for less money. At the same time, demand from Europe remains low. For several weeks now, CIF-FOB - contracts for wheat on large vessels from Ukraine have been almost non-existent due to high risks and low margins.

But export demand for Ukrainian soybeans remains very high, as traders cannot form the necessary batches, so they are forced to pay maximum prices even for small volumes.