Ukraine overcomes Iran concerns to see corn export sales bloom

Ukraine’s corn exporters appear to have resolved some of the concerns around trading with Iran as line up data and trade sources see a rush of cargoes heading to the Middle East country in a final flourish for the record-breaking Ukrainian crop.

The move could spell bad news for Brazil, which has seen a roaring trade in meeting Iranian demand in recent months.

According to line-up data, around 411,600 mt of corn has either loaded or is expected to load through April with Iran as the nominated destination, with about 712,000 mt already sailing over the course of the marketing year.

Some market sources have suggested that the number could be even higher as fears that the trade could impinge on US sanctions targeting the destination means some of the exports are done under the radar.

“It’s not the full picture, as it’s also common practice for destinations to change after the vessel leaves Ukrainian ports,” one market source said.

And, while Ukraine’s FOB prices have remained higher versus other origins, there are signs that interest for suitable cargoes for Iranian buying is being seen in the market.

“I see great demand for May, June and even July,” one broker told Agricensus, although deals have slowed in recent days as corn prices globally plunge and Ukraine FOB prices have been slow to follow the price lower.

“What is worrisome is that now there are no new deals, although the demand is there but Ukraine sellers will have to go down,” a second broker added.

Sanctions favour Brazil

Iran has been subject to ramped up US sanctions as the administration of President Trump sought to isolate the country after accusing it of violating an agreement on nuclear weapons research.

That reportedly made Ukraine’s corn exporters wary of selling into the country, despite a series of tenders mounted by the state importer SLAL as the country sought to import up to 300,000 mt of corn per tender.

Funding has been one of the main obstacles facing Ukraine exporters, with only two European banks said to be prepared to provide trade finance when it comes to dealing with Iran, according to a market source.

The impasse was a boon to Brazil’s corn exports with the country seeing an unseasonal spike in exports from its southern provinces, as Brazil looked to cash in the premium that accompanies Iranian buying.

Iran is already the biggest buyer of Brazilian corn, with the South American country seemingly unfazed by the arrival of sanctions and current line up data shows 459,568 mt of corn is currently loading or waiting to load in Brazilian ports.

At the same time, Ukraine was facing a potential problem in generating enough regional demand to place its own record corn crop, with exports to Iran drying up shortly after the US imposed new sanctions back in August 2018.

For Ukraine, the boost through April could set the seal on another impressive monthly export figure despite the end of the marketing year rapidly approaching, traditionally a time when export pace may slow down.

The signs that Ukraine is stepping into the Iranian supply chain is likely to slow exports from Brazil just as the country prepares to harvest its own huge corn crop, which could ultimately total 100 million mt.