Purchase prices for corn in Ukraine are falling, despite lower crop forecasts in Brazil

After the publication of the January USDA report, traders in Ukraine sharply reduced their purchase prices for corn, citing a reduction in export sales. In response, farmers switched to selling soybeans and sunflowers, the prices of which remain at a high level.

Since Monday, the purchase prices for corn for delivery to Black Sea ports have decreased from $156-160/t or UAH 6,550-6,650/t to $146-153/t or UAH 6,000-6,250/t, although the prices of fodder wheat, whose offers have recently been in deficit, have decreased not so significantly.

During January 1-15, 2.3 million tons of grain were exported from Ukraine by water transport, in particular, through the ports of the Danube - 477 thousand tons, and through the ports of the Black Sea - 1.7 million tons, which exceeds last year's rates.

According to analysts, the line-up of ships for corn for the next month is 2-2.5 million tons, so traders will be forced to intensify purchases in order to fulfill contracts.

The market supports a decrease in the cost of freight from Black Sea ports. According to Spike Brokers, during the week the freight rates of bulk carriers in the direction of China decreased by $5/t, while the freight rates of handysizes and lighters remained unchanged.

Currently, the rates for transportation from the port of Chornomorsk are:

• Spain (Mediterranean) – $39-42/t (30-35 thousand tons);
• Italy (east coast) - $37-38/t (30-35 thousand tons);
• Italy (west coast) – $38-39/t (30-35 thousand tons);
• Portugal - $39-42/t (30-35 thousand tons);
• ARAG – $52-55/t (30-35 thousand tons);
• China - $57-63/t (60-65 thousand tons).

Rates for transportation from the port of Izmail to Constanta (Romania) by barges of 1-3 thousand tons are 22-28 €/t.

Brazil has begun harvesting first-harvest corn, which, according to AgRural, has been threshed on 5.1% of the area and will go mostly to domestic processing. After harvesting soybeans, farmers have already sown 0.4% of the planned area with second-crop corn.

AgRural experts estimate the total corn harvest in Brazil in 2024 at 114.1 million tons (137 million tons last year), Conab agency – at 117.6 million tons, USDA – at 127 million tons. The discrepancy in forecasts is due to uncertainty with the prospects of the second corn crop , whose sowing delay will reduce the yield, as it happened in 2022.

March corn futures in Chicago fell 8% for the month to the lowest level since late 2021 at $174/t (-37% y-o-y) amid sluggish US exports and an increase in the US production forecast in the latest USDA report.

Traders' attention is focused on Argentina, where the local stock exchange in Rosario, against the background of favorable weather, raised the corn harvest forecast to 59 million tons (34 million tons last year), although the USDA estimates it at 55 million tons. Forecasts of heat in the country in the next few weeks will support global quotations on corn