US corn wins price competition with Ukraine into China
Chinese importers have been busy buying cargoes of US corn, with trade sources estimating anywhere between five and 18 vessels have been sold as the pricing of US cargoes outperforms even Ukrainian corn cargoes, trade sources have told Agricensus.
Facing a barrage of exporting challenges, Ukrainian corn has been the cheapest option internationally for several months, but a slow export pace and mounting stocks has made the US increasingly competitive - to the point where it is now on par with Ukrainian.
The price for the purchases was not known, with trade still guessing if the tonnage figure is real or not, but trade sources agreed that US corn is currently the cheapest into China.
“That was the talk all last week, 1.2 million mt or something but it still hasn’t hit the flash, so it must of either been a sale to another US entity that hasn't been priced yet, or a rumor,” a US-based broker said.
The selling ideas for US corn loaded from Pacific ports on CFR China basis were indicated at around $335-339/mt for the March-April period, while Ukrainian corn is offered at $338-340/mt on the same basis.
But the price ideas for Ukrainian origin were shown for April dates and with the grain deal not officially extended, traders have not risked making firm offers.
It also comes as, unlike the US, in Ukraine, there is no guarantee the vessel will be loaded on time, as the inspection delays continued with some vessels currently waiting up to 50-60 days.
“On the corn situation, I am not surprised, and it tells me the Chinese are nervous about corn procurement if they are buying US this time of year,” a US-based trader said.
In terms of Ukrainian corn, the US sale injects further negative risk into the market and could push the Ukrainian corn price lower as well as have larger consequences down the line.
The sale of US corn adds negative price risk to the Ukrainian market, currently struggling with a quiet domestic market and weak export demand tied to shipping delays and uncertainty over the Black Sea corridor, and could negatively impact farmers who may have difficulty financing new crop planting due to lower corn prices.
“PNW is same as Ukrainian corn, even cheaper, thus it is not helping to get the Chinese, and on top of Chinese, that book vessel which is in the JCC is threatening to cancel the contract if late,” an EU-based trader said.
China has booked 6.45 million mt of corn through September 2022-January 2023 period, 23% less compared to the same window a year ago.
Almost half of that amount was booked from Ukraine - slightly above 3 million mt.