December 28, 2023
 

Ukraine corn exports set to decline next year due to logistical issues, Russian attacks

Corn importers in Europe and North Africa anticipate a steady flow of Ukrainian exports in 2024, but persistent logistical difficulties and Russian attacks on infrastructure pose challenges for a substantial increase in supply, according to trading sources, S&P Global reported.

Following the breakdown of the Black Sea Grain Initiative in July 2023, Ukraine has adopted new export routes, utilising the Danube via Reni and Izmail and transit routes through the European Union. A marine corridor through the Black Sea has also been developed, facilitating the shipment of over 5 million metric tonnes of farm produce, easing financial pressures on Ukrainian farmers.

Despite the more favourable conditions, Ukraine's corn shipments are likely to face ongoing delays in 2024 due to logistical bottlenecks, crowded port terminals, and continued attacks on Danube berths by Russia. Additionally, new rules on agricultural exports, including mandatory registration for food export firms until December 31, 2024, are expected to contribute to further delays and costs.

Ukraine is projected to harvest approximately 27 million metric tonnes of corn in MY 2024-25, a 3 million metric tonne decline from the previous year. The country's corn exports for MY 2023-24 are estimated at 23 million metric tonnes.

With the EU experiencing increased demand for imported corn due to domestic production challenges caused by heatwaves and droughts, Ukraine and Brazil are expected to remain major corn suppliers to the EU-27 in MY 2024-25. But tensions with neighbouring EU states, including temporary bans on grain imports, may impact Ukrainian exports.

While Ukraine's duty-free access to the EU market has been politically contentious, the EU's corn imports are forecasted to drop to around 18 million metric tonnes in MY 2024-25 compared to an estimated 21.1 million metric tonnes in MY 2023-24, reflecting a rise in domestic production.

Buying on a FOB basis from Ukraine has become less desirable due to war risks, while CIF trades remain lucrative, with buyers bidding around US$226/metric tonne CIF for corn from Ukraine in January.

Corn exports from Romania and Bulgaria are commanding higher premiums, with FOB CVB corn assessed at US$221/ metric tonne on Dec. 15, down 26% year on year, according to Platts, part of S&P Global Commodity Insights.

-      S&P Global