Ukraine's corn exporters boost FOB offers as futures shed 3%
A near 3% fall in corn futures has unlocked selling activity in Ukraine's physical corn market, with the number of FOB cargo offers increasing and values on domestic CPT offers moving lower as traders look to cash in on the recent run of high prices before profit taking erodes values.
Pressure has increased on Ukraine's corn market as more export offers appeared as futures traders closed out long positions, with the return of physical volumes weighing on the overheated domestic market and leaving more room for a fall on FOB basis.
The fall comes after a month of uninterrupted price increases culminated this week with a stable start as selling ideas evaporated and a lack of farmer selling meant exporters struggled with origination.
“For now, more offers are popping up and buyers are backing off,” a broker said.
Levels moved lower as the number of available offers increases, with some November loading offers moving down by $3/mt compared with Tuesday to reach $237/mt FOB HIPP.
“I am not sure if there are many longs... but indeed there is some profit taking here on cash and on CBOT futures,” a trader said.
Meanwhile, a massive drop was recorded on the domestic market, where trade levels fell by 3% from $230-$232/mt CPT to be heard at $224-$225/mt and lower for small quantities.
Correction
Even with the country's harvest now crossing the 50% complete mark, some trade sources still expect any fall in prices to be a short lived correction with prices set to continue rising on lower production, a major export line up and pent up demand that is expected to take advantage of any sign of weaker cash prices.
Uncertainty over the size of the corn crop has been the main supporting factor, with Ukraine's government maintaining its outlook of 33 million mt, but that figure well below the near-40 million mt estimates that were floated at the start of the season.
With South American exporters also short of supply, global corn prices have shown strong price increases, spawning a raft of reported defaults from producers who have lost production along with others who have cancelled contracts agreed at lower prices in order to capitalise on prices that are up to $70/mt higher.
That has made origination difficult and the fact that traders still have to secure enough volume from the market to meet an export slate of at least 1.8 million mt booked for October and November loading dates also gives additional support.
Ukraine’s official corn crop estimations were cut to 33 million mt from an initial 37 million mt due to a prolonged drought over the harvest period that coincided with high demand for corn from China and other destinations that have spurred world corn prices higher.