Ukraine gears up for make-or-break 2019/20 corn export period

Ukraine’s corn traders are entering a critical period for the country’s export outlook and are pinning their hopes on pressure from a huge harvest now coming to market to sharpen their competitiveness and wrest away destination markets that have been dominated by South America.

The dynamics mean Ukraine should be well positioned to secure export market share and repeat a record-breaking performance through late 2018 and early 2019, which will be critical if the country is to avoid building carryover stocks.

But the poor global demand picture means a slow start could hamper their prospects.

“I am hoping that, similar to last November and December, Ukraine spot demand will appear to get us close to 6 million mt. For now, it is very optimistic but if China materializes and Egypt or the EU destinations see Ukraine as the best option, then maybe,” one market source said.

Ukraine managed to export some 5.2 million mt through November and December 2018, according to government data captured in the Agricensus Export Dashboard.

That teed up a dominant performance through early 2019 that saw the country average 3.6 million mt of exports a month for the first five months of the year – tearing up records in the process.

“For now, the demand for December and January is still thin, but after elections in Argentina it will become clearer. If they impose new taxes, then Ukraine corn will go to Egypt and European markets even with recent prices, and thus more volumes will be exported,” a second source said.

That sort of performance will be critical if Ukraine lands another record-breaking corn crop in the next few weeks, with some estimates expecting the increased planted area to counterbalance lower yields and deliver 36 million mt of production.

With the new marketing year’s export pace already inflated by volumes left over from last year’s record crop, any lapse in the pace could pile fresh pressure on FOB Ukraine prices, or risk adding to ending stocks.

“We need 2.5-3 million mt for November minimum, and around 3 million mt for December, and even more for January. After that we have to handle around 3 million mt each month until May to make 27-28 million mt exports,” a third source said.

Key will be primary export markets in the EU, China, and Egypt – where buying has either been dominated by South American supply recently or has been slow in recent months.

EU data shows that much of the bloc’s corn imports this year have come from Brazil – just over 61% as the country clears its own record harvest with its share of EU imports surging 90% over the year to date.

However, while Ukraine’s share is down, outright volumes are actually higher to the EU this year at 1.7 million mt, versus 1.3 million mt at the same point of 2018/19.

And, with the value of Brazil’s currency climbing against the US dollar, the country’s competitiveness versus other origins has slipped, throwing Ukraine a window of opportunity that should stay open until Argentina’s new crop arrives from April onwards.