Ukrainian forecasts for corn market output, exports differ from USDA report

14.12.2017

Ukrainian corn producers expect lower production and exports than the US Department for Agriculture's latest World Agricultural Supply and Demand Estimates report for 2017-18 is forecasting.

Difficult weather conditions, expensive internal logistics and price competition from the US and South America have stifled workable margins for Ukrainian corn producers.

The WASDE report estimates 25 million mt of corn production, stable from the previous report, and similar to the 25.2 million mt the Ukrainian Ministry of Agriculture outlined Friday. WASDE puts exports at 20.5 million mt, also stable.

By contrast, many market participants say total production will be 24 million-24.5 million mt. with exports totalling 18 million mt. Poor weather has not only delayed the harvest but has damaged quality and thus the amount which can be commercialized.

"Production will be between 23.5 million to 25.5 million mt with about 18 million mt of exports. The difference between production and exports will be given over for domestic feed," a source said.

Ukrainian corn has even missed out in Egypt where freight has made it more competitive than Argentine and Brazilian. "Buyers still prefer Argentine origin despite Ukrainian being a little cheaper" a source said.

Corn in Western Ukraine looks better than year while the Center looks the same but the South and East look a little worse, another source said.

Many participants say they expect around 10 million mt of Ukrainian corn to go to the EU compared with the 16 million mt expected by the USDA next season. They also expect China to take just 2 million mt of Ukrainian corn compared with the USDA forecast of 3 million mt. Chinese imports of corn are expected to rise subsequent seasons as China gives more domestic acreage over to soy at corn's expense.

Nonetheless, the competitiveness of US corn remains a concern, especially as it is now pricing to non-traditional destinations. Sources said several 60,000 mt parcels traded to Spain recently.

Offers for US corn for FOB January-loading Panamax vessels have been heard around $156/mt while Ukrainian Handysize FOB offers are around $166/mt.

Consequently, Ukrainian producers expect their advantage to remain for spot pricing to nearby destinations.


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