January 5, 2021

 

Ukrainian corn exports stay strong in first four months of 2020-21 period

 

Ukraine's corn exports have stayed strong over the first four months of the 2020-21 marketing year, despite a year-on-year decrease of six million tonnes in production.

 

However, it will be difficult for the country to maintain the current export pace, given strong competition from other global suppliers.

 

Since the start of the marketing year in September, Ukraine's corn exports had reached 8.7 million tonnes by December 30, down by 1.3 million tonnes from the record 10 million tonnes exported over the same period last year, according to official data. But this was still the second-highest volume to have been shipped over the first four months of a marketing year on record.

 

The fast pace of exports has been supported by strong demand from China, which has significantly increased its purchases of corn this season, owing to greater buying interest from the country's animal feed sector following the resumption of swine breeding.

 

Ukrainian corn exports to China have nearly tripled, with more than 3.5 million tonnes of the grain having shipped since September 1, compared with just 1.3 million tonnes over the same period of last year. Additionally, total exports to China are expected to reach about seven million tonnes by the end of the 2020-21 marketing year, up by 1.5 million tonnes from the record 5.5 million tonnes exported in 2019-20.

 

In 2021, Ukraine may face stronger competition from US corn supplies for Chinese demand, with US sellers having already begun to take away Ukrainian share in the Asian market.

 

Only 500 tonnes of corn had been exported from Ukraine to South Korea by December 30, compared with 600,000 tonnes over the same period last year, while in contrast, South Korean purchases of US corn had reached 1.1 million tonnes by December 17 compared with only 10,000 tonnes over September-December 2019.

 

Ukrainian corn has started to lose its competitiveness in major importing countries, not only because of reduced export supply availability, but also due to higher prices.

 

On September 1, the spot price for Ukrainian corn stood at around $184/tonne fob Odessa and held a premium of roughly $13/tonne to the US corn fob Gulf price.

 

On the same date last year, the value stood at $156/tonne fob and at a $1/tonne discount to the US price, according to Argus' agricultural division Agritel.

 

Higher prices for Ukrainian corn have already affected demand from the European Union, with exports to the bloc ending December around two million tonnes lower year on year at 2.7 million tonnes.

Recent gains in US corn prices may allow the global demand for Ukrainian corn to partially recover at the start of 2021, but from March, Ukraine will face strong competition from the new corn crop harvest in Argentina, meaning it could struggle to achieve its 24 million tonnes corn export target for 2020-21.

 

- Argus