Andrey Sizov
18.09.2019
A week ago, Ukraine, the largest corn exporter in the Old World, started to harvest the new crop. Starting average yield is high, 95 bu/ace (6 mt/ha) which is 8% above the previous year. Around 3% of the area has been harvested as of the beginning of the current week, so yield figures will change, but there are good chances that the country’s crop is likely to be record-high.
We estimate the new crop at 1.4 bln bu (36.3 MMT, USDA: 36 MMT), 1% above the 2018 record. The weather conditions were generally favorable for the new crop until late August when dryness somewhat damaged the yield potential of late-planted corn.
The good Ukrainian corn crop is bad news for other corn producers, including US farmers. With low domestic consumption and no ethanol industry to absorb the excessive supply big crops in the country convert into big exports. Typically Ukraine ships abroad 70-80% of a corn crop. This season the country is expected to export 1.16 bln bu (29.5 MMT; USDA 30 MMT) of corn, which is close to the previous season’s record.
At the same time EU, the largest market for Ukraine, is expected to significantly cut corn imports this year, by 13% to 0.8 bln bu (21 MMT), thanks to the good wheat crop, part of which will go to feeding. For Ukraine, this may be partly offset by larger Chinese imports which are forecasted by USDA to rise from 182 mln bu (5 MMT) to 255 mln bu (7 MMT) on a lower domestic supply. China is another top destination for Ukraine.
However, even with bigger Chinese shipments Ukraine is still could have an extra exportable surplus that needs to find a market. Those markets are likely to be found also in Asia, including such important buyers of US corn as South Korea (USDA: 0.4 bln bu; 10.5 MMT annual imports) and Japan, the largest world corn importer expected to buy 0.6 bln bu (15.6 MMT) this season. Japan is #2 destination for US corn and South Korea is #4. Ukraine used to supply corn to those countries in the past, but in limited volumes, this season it could try to enter those markets again.
Despite the projected decrease in exports from South America competitive environment for US corn in Asia could be tough again thanks to ample supply from Ukraine.
The piece has been originally written for Agriculture.com
