Ukrainian corn competes into China, amid talk of 15 vessels fixed
The potential reopening of Ukraine's deep water ports has galvanized export indications for the country to the point where price levels look competitive enough to supply corn into the key global importer of China, in a move that will give further creedence to reports of ships already being fixed.
Rumors appeared late last week that around 12 and potentially as many as 15 vessels have been fixed to be loaded from Ukrainian Black Sea ports into China, and the first physical offers appearing in the market for delivery into the country look competitive, according to trade sources.
The move comes after the collapse of the Black Sea grain initiative earlier this year, when Russia pulled out of a four-way agreement with Turkey, the United Nations and Ukraine.
Since then, Ukrainian authorities have been testing the resolve of the Russian military, who issued a warning to all civilian shipping in the Black Sea heading to Ukrainian waters after the grain deal's collapse, but a series of arrivals and departures from the key deep water ports has raised hopes that a resumption of exports is possible.
Even though there were wide spread reports around the number of bulk vessels booked from Ukraine for October-November shipment, it proved impossible to confirm, although trade sources warned that - even if true - not all cargoes would be grain shipments.
Currently any cargoes can be shipped from Ukraine, and currently a vessel with a summer deadweight of around 75,000 mt is currently loading iron ore most likely bound for China.
Nonetheless, the offers that have started to circulate in the market for Ukraine-originated corn for delivery into China look competitive compared to other origins - and that means it is possible that some volume has been traded.
Current offers were seen at $275-280/mt CFR China on Wednesday, with buying ideas heard at $260/mt CFR and possibly rising to $265/mt CFR, all for October shipment.
However, it is expected that as more vessels head to Ukraine, freight rates would likely continue to drop, making the origin look more attractive.
Since the first vessels entered Ukraine's deep sea ports of Pivdennyi, Odesa and Chornomorsk two weeks ago, freight ideas for Chinese destinations have already dropped by around $10/mt.
That compares to offers seen from Brazil for December shipment at around $232/mt FOB Santos and freight seen at $43.50/mt, making the CFR level at around $275.50/mt.
Meanwhile, US-origin corn is currently offered at around $235/mt FOB USG which with the freight idea at around $58/mt which might push the CFR levels to $293/mt.
Both North and South American exporters have domestic issues that are likely to leave little space for either to ramp up exports, with the US facing significant issues with the Mississippi, and Brazil facing a shortage of farmer selling that is starving supply to the primary export hubs.
China is the world's biggest corn importer, with the USDA’s projection for imports in the 2023/24 marketing year at 23 million mt, and used to buy up to 30% of its corn supply from Ukraine.
China was also the main destination of Ukrainian corn exports in 2022/23, as the grain corridor deal enabled the supply of 5.55 million mt of corn, but since the end of thedeal, China has been forced to switch to other suppliers.
That has led to reports of large volumes of Brazilian corn rumored to have traded.
Brazil supplied 902,111 mt of corn into China in July 2023 and 2.3 million mt in August, making it the main destination for its corn exports so far this season.