Corn prices in Ukraine are falling under the pressure of logistics problems in ports

Purchase prices for corn in Ukraine continue to fall, although purchases from China have somewhat stopped the pace of decline. However, in the near future, the pressure of fundamental factors will increase, and the market will go down again.

Last week, corn prices even increased by 50 UAH/ton to 7900-8000 UAH/ton, but this was caused by a decrease in the hryvnia exchange rate, as dollar prices remained in ports at the level of 255-260 $/ton.

The deterioration of weather conditions at sea led to a delay in the delivery of ships, so in many ports the reception of corn was stopped due to the lack of free containers. As a result, queues for unloading cars increased to 3-5 days, and traders reduced the volume of purchases. Many companies reduce their trading activity on the eve of the holidays, because they have the necessary grain shipments to close the next contracts.

As of December 20, Ukraine exported 8.5 million tons of corn, which is only 10% higher than last year's pace. However, to reach the projected 32.5 million tons for this season, it is necessary to ship 900 thousand tons of corn every week.

The pace of corn exports from the United States has improved, but is also lower than expected. During the week of December 10-16, corn exports increased to 1 million tons, of which only 20% were sent to China (34% a week ago). Since the beginning of the season, 11.31 million tons of corn have been exported, which is 12% lower than the record pace of my 2020/21.

In the second half of the season, China remains the main potential buyer of corn for Ukraine and the United States, but in November it reduced corn imports by 36% compared to last year to 790 thousand tons (of which 720 thousand tons were purchased in the United States), and in general in 2021 it purchased 27.02 million tons of corn.

March futures for US corn on the Chicago Stock Exchange yesterday fell by 0 0.88/ton to.232.7/ton, although they have remained at a high level since July. However, in the near future, falling prices for oil, vegetable oils and soybeans will increase pressure on quotes.

March futures for Black Sea corn for the week increased by 3 3.75/ton to.274/ton against the background of Russia's restriction of grain exports for the period February 15 – July 1 at the level of 11 million tons, including wheat – 8 million tons, which reduces the export potential of barley and corn to 3 million tons.

March futures for European corn on the Paris stock exchange for the week fell by 4 €/ton to 240.25 €/ton or 2 271/ton, which increases pressure on the quotes of Black Sea corn.

Since the beginning of the season, the EU has imported 5.9 million tons of corn, which is 31% lower than last year's pace, while 2 million tons were delivered from Ukraine and 2.9 million tons from Brazil.

A 10% decrease in oil prices for the month, as well as prices for vegetable oils, soybeans and sunflower will lead to a drop in prices for meal, which feed producers will begin to replace expensive corn, so demand for it will also decrease.