Ukraine FOB corn wilts as export, sorghum beats out competition

15.05.2018

Ukraine’s old crop corn prices are under pressure, as a lack of demand and fierce competition from the US stifles export demand, market sources told Agricensus Tuesday.

Offers for handysized vessels in panamax ports loading in May and June were heard as low as $199/mt Monday, versus $210/mt in late April.

Exports have fallen 13% year-on-year to 15.2 million mt and a lack of buying from China as a key element.

“The problem is that this year the Chinese look happier with their old crop; their internal corn exchange price is increasing due to future supply concern, but they didn’t turn to Ukraine after problems with the US started,” one Ukraine-based market source said.

“Instead, US volumes have flooded corn in EU markets and generally MENA regions reducing the market share for Ukraine,” he said, with displaced sorghum cargoes also playing a part in cutting demand.

Bulls in China’s shop

The deterioration in trade relations between China and the US spawned an effective ban on US sorghum exports to the country, fostering expectations of increased corn buying to cover the loss of sorghum supply.

However, China has unleashed stocks from its strategic reserve, auctioning some 35 million mt since April 12, but seemingly finding less buying interest as each auction has gone on.

Alongside that, the displaced sorghum cargoes have priced aggressively in order to find homes, with Spain and Vietnam said to be among the countries taking volumes in.

Finally, the US has – despite a stronger US dollar on international currency markets – maintained an active programme of corn exports, with both the PNW and US Gulf continuing to handle substantial volumes.

The most recent export inspection report shows Egypt, Japan, Taiwan, Mexico and Vietnam all taking over 100,000 mt of US corn in the week ending May 10, with Spain, Hong Kong and South Korea also taking volumes.

Ukraine government data shows Egypt, Spain and China have been the three biggest recipients of Ukrainian corn since 2014, with South Korea coming in as the ninth biggest customer.

With Ukraine expected to export around 18.5 million mt this marketing year, market sources have put the export surplus remaining at around 3 million mt, although some of that corn volume is not export quality.


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