Ukraine has already sold forward around 20% of its corn export potential in a flurry of sales that, along with concerns over the supply in South America, have supported cash market prices regionally, trade sources have told Agricensus Wednesday.
Ukraine actively started marketing forward sales for the upcoming 2021/22 production back in January 2021 as most of the volumes of the old crop were sold.
However, as the market has become increasingly illiquid, trade sources say that around 6-7 million mt of new crop corn has already been booked from the new marketing year.
“Ukraine has sold a lot for forward into China, Iran, Asian countries,” a trader said, with most of the volume sold to China.
That is a higher figure compared to last year’s forward sales at the same point of 2020, as demand from China has appeared much earlier compared to last year when Chinese buying only entered the Ukrainian market just ahead of the September harvest.
“There might be more (forward sales), last year China appeared only in August, and dented the market just ahead of harvest start, while this year China was buying steadily during the whole period,” a trader said.
That buying, along with market expectations that more demand will appear soon for Ukrainian origin corn amid issues with supply in North and South America, is giving hope for further price increases ahead.
“I’m bullish for Ukrainian corn, given the deferred demand and the viability of competitive origins,” a trader said, meaning that there is still more interest expected from European countries, the Middle East, and China.
Current corn offers for November-December loading dates are indicated at 113-115 cents over the December contract.
That is higher than Argentinian and US corn offers for the same dates, but Ukraine has a freight advantage into Asia compared to Argentina, while the US cannot supply corn to Iran and the EU, the main buyers for Ukrainian corn.
Alongside that, Argentina faces logistics issues relating to low water levels in the main Up River hub, while the US is busy with old contracts execution as the marketing year nears its end.
China is now one of the world’s biggest corn buyers and expected to import 20 million mt of corn in 2021/22 marketing year.
While that is a significant increase on recent years, it actually represents a 30% decline on last year’s figures, when China bought millions of tonnes of US corn at short notice as it attempted to plug a major gap in domestic supply.
Meanwhile, Ukraine’s corn production is forecasted to increase 24% amid more favorable weather versus last year to 37.5 million mt, and exports to go up by 31% to 30.5 million mt, according to USDA data.
