Farmers in Ukraine sharply reduced corn sales amid low purchase prices

A significant increase in the global corn production forecast in the USDA's January report sent stock prices down to a 3-year low, which increased the pressure on purchase prices in Ukraine.

During the week, prices for corn delivered to Black Sea ports remained at $148-153/t or UAH 6,000-6,200/t, but the volume of offers from producers decreased significantly.

The export of grain from Ukraine for January 1-25 exceeded the similar indicator of 2023 by 22%, but the volumes of deliveries to ports decreased in the second half of January.

Against the background of Houthi attacks on ships in the Red Sea and the laying of logistical routes bypassing Africa, the cost of freight from Black Sea ports to China increased by $3-5/t to $60-67/t (60-65 thousand tons). This improves the competitiveness of South American corn compared to Ukrainian corn.

China continues to actively buy corn, and during October-January imported 14 million tons of grain compared to 4.4 million tons during this period last year. In general, in 2023/24, the import of corn may reach 25 million tons.

Rates for transportation from the port of Chornomorsk decreased by $3-5/t and are:

• Spain (Mediterranean) – $35-37/t (30-35 thousand tons);
• Italy (east coast) - $33-35/t (30-35 thousand tons);
• Italy (west coast) – $38-39/t (30-35 thousand tons);
• Portugal - $36-39/t (30-35 thousand tons);
• ARAG – $48-51/t (30-35 thousand tons).

Lower freight rates and prices for Ukrainian corn could increase seaborne shipments of grain to the EU, which in FY 2023/24 as of January 18 imported only 9.86 million tons of USDA's projected 23.5 million tons of corn, compared with 17 million tons for this last year's period

According to AgRural data, in Brazil, first-harvest corn was harvested on 8.4% of the area (6.9% last year), and second-harvest corn was planted on 4.9% of the planned area (1% last year). High rates of sowing will reduce the impact on prices of the speculative factor associated with a possible reduction of the harvest due to late sowing.

March corn futures on the Chicago Stock Exchange rose 1.2% to $178/t yesterday on the back of a cut in the outlook for US corn plantings for the new season, not reacting to a frost-induced drop in ethanol production of 29% for the week.

In 2024, S&P Global experts estimate the area of corn sowing in the US at 93 million acres, and Farm Futures - at 92.798 million acres, while in 2023 they amounted to 94.6 million acres.