Ukraine's corn margins could dip below 10% on slow start to 2017/18: UGA

Ukraine’s corn farmers are facing severely pressured margins in the 2017/18 marketing year with the profitability of corn set to fell into single percentage points, a report from the Ukraine Grain Association said Monday.

That compares with 46% in the previous marketing year, the industry group said.

“In Ukraine, large corn growers are in no hurry to expand their crops under this culture,” the report notes, with severe weather conditions taking a toll on the corn crop while other products have proved to be more lucrative.

Exports have also slowed as the low global price of corn has seen the country’s sellers be more discerning in picking when and who to sell to.

While healthy volumes continue to move to China, there are signs that some of Ukraine’s other markets have been shopping around for corn supply.

Egypt, which in 2016/17 increased its imports of Ukraine corn by 56%, has recently bought corn from the US as quality concerns have been overcome by the aggressive pricing of trans-Atlantic supply.

“The results of the first four months of the 2017/18 corn marketing year have seen low prices and a rather slow export rate,” the report says, quoting 4.45 million mt sold to world markets, versus 6.34 million mt at the same point in the previous year – a fall of close to 30%.

Feast versus famine

Ukraine’s 2016/17 marketing year was a strong export performer, with the country in third place globally as it sold 41.8 million mt of grains.

Almost 50% of that volume was corn, according to the UGA – some 19.4 million mt.

The USDA’s WASDE report, however, ranked Ukraine fourth in the list of biggest corn exporters, behind the US, Argentina and Brazil – the latter of which moved up from fourth into second following a huge harvest.

USDA estimates put Ukraine corn exports at 21.33 million mt, Argentina’s exports at 25.5 million mt, Brazil at 34 million mt and the US at 58.24 million mt.

However, the oversupply of corn has weighed on global corn prices and depressed margins for farmers globally.