Corn buyers must ‘adjust to upside’ as Ukraine farmers in driving seat
Ukraine’s farmers are in a strong position as higher global corn prices and improved storage options domestically enable them to command higher asking prices, market sources said Monday.
"The local market is firming more dynamically, so $190/mt or higher is possible from the sellers’ side very soon," one market source told Agricensus.
"If the market keeps firming, buyers will have to adjust to the upside," he said, but China’s buying interest will be key in providing that support.
"Price moves will depend on whether China is back to buy Ukraine corn after the holiday period or not," a second trading source said, with Ukraine corn poised to firm further should demand materialise and offers already jostling for any renewed interest.
Offers for China corn qualities were heard at levels between $188-$190/mt, with a trade rumoured done at $187/mt for April loading.
That compares with bid levels of between $180/mt and $181/mt heard at the end of last week.
In the driving seat
Investment in corn storage capacity and a background of low corn prices and aggressive South American competition has seen Ukraine’s farmers keeping their corn in store waiting on higher prices.
Now, as the corn complex has picked up on rampant soybean prices and weather fears affecting both Argentina’s corn crop and Brazil’s safrinha crop, farmers are looking to cash in on the firmer sentiment to secure higher prices for their corn.
China has seen good demand for Ukraine’s corn in recent months, with China’s customs data released over the weekend showing it imported 388,000 mt from Ukraine in January – 99% of its corn imports that month.
However, year-on-year, China’s buying of Ukraine corn has slowed versus 2016, with the country taking just over 2 million mt in 2017, a fall of 667,189 mt on the previous calendar year.
"[Domestic] corn prices were $170/mt last week,” the first trading source said, with prices moving up to $177/mt in short order.
"No one sells if you want to buy; farmers just name their price level and if you bite they draw back and return with a higher price the next day," he continued with Ukraine still holding some 7 to 9 million mt of corn for export.
With South America quality and quantity fears, Ukraine farmers sense an opportunity as corn remains amongst the cheapest feeds on the back of stronger soybeans while wheat prices have also been firming.
"We've been cleaning floors for some time, now the time has come to gain some altitude," the first trader said.