Corn prices in Ukraine remain high due to demand from China

An increase in the USDA's December report forecast for global corn production and stocks in my 2021/22 has not yet led to a sharp drop in prices, as the market has received new support factors in the form of increased demand from China, ethanol producers in the United States and higher fertilizer prices.

For Ukraine, the production forecast was raised by 2 million tons to 40 million tons, although according to the Ministry of Agriculture of Ukraine, a record 40 million tons of corn have already been harvested from 98% of the area, so farmers will receive another 0.5-0.8 million tons before harvesting is completed.

In addition, Ukraine is accelerating corn exports and as of December 13 has already shipped 7.862 million tons, which is 11.8% higher than last year's figure. However, for this season, the export forecast was raised by 35% compared to the previous season from 24 to 32.5 million tons, so by the end of the season it is necessary to export another 24.6 million tons of corn or 900 thousand tons weekly. However, logistical problems, especially with rail transportation, lead to instability of supplies, queues at ports first of ships, and now of wagons and trucks.

Purchase prices for corn in Ukraine at the beginning of the season reached a record $270-275/ton in ports amid a delay in harvesting, but now, against the background of increased supplies, including Under forward contracts, traders have lowered prices to 2 255-258/ton or UAH 7850-7950/ton.

Prices could have fallen even lower, but they were supported by information about China's purchase of 600 thousand tons of Ukrainian corn with shipment in January - April. If demand from China continues, Ukraine will be able to export all corn at high prices this season.

At the same time, China is buying cheaper American corn. According to the USDA, during December 3-9, the United States exported 810 thousand tons of corn, 34% of which to China. Corn exports in the current season as of December 9 amounted to 10.206 million tons, which is 16% lower than last year's pace. To export the projected 63.5 million tons for the current season (69.9 million tons in 2020/21 MG), it is necessary to ship 1.4 million tons of corn weekly during the months remaining until the end of the season.

It is worth remembering that from March, corn from Argentina will enter the world market, for which experts raised the production forecast to 57 million tons compared to last year's 50.5 million tons and the USDA forecast in December of 54.4 million tons.

March futures for US corn in Chicago yesterday fell by 2 2/ton to 2 230.3/ton, and for Black Sea corn - by 0 0.75/ton to.270.25/ton, losing 3 3/ton after the report was published.