Ukraine’s bumper corn crop to pressure U.S. exports business

Ukraine is expected to harvest a record-high corn crop this year which threatens the US exports to Asia

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

Follow the Black Sea grain market

Get your free trial of The Sizov Report — an analytical service covering agricultural markets of Russia, Ukraine and Kazakhstan

Try for free

More Articles for You

Black Sea wheat moved lower again but global benchmarks are on the rise

12.5% wheat prices in Russian deep-sea ports dropped $4 to $244/mt. The market was under pressure of weak demand which can increase short-term thanks to higher global benchmarks.

Russian wheat floating tax explained, GASC returns to the market

Egyptian GASC is holding a wheat tender on April 6 for August shipment. We believe that the Egyptian firm could return to the market to test how the new Russian floating tax will affect offers. Andre explains how it’s calculated.

Black Sea wheat sharply lower on new crop prospects, Russian farmers hope that the tax will be lifted in 2021

Last week, 12.5% wheat prices in deep-sea ports dropped $21 to $253/mt. Traders continued to report extremely low demand, global benchmarks moved lower.

Black Sea wheat prices lower on weak demand and good weather

Russian wheat prices in deep-sea ports dropped $9 to $274/mt (12.5%, FOB) on lack of demand and weaker global benchmarks

Black Sea wheat prices lower on improving weather

Weather improves in the Northern Hemisphere pushing Black Sea wheat prices lower

Russia: share of wheat in poor condition has fallen unprecedentedly

Share of Russia’s grain crops in poor condition has fallen to 7-9% since November when it was at 22%, a record high level for a decade.