Ukrainian corn makes rare trade into Vietnam despite war risks

23 Feb 2022 | Masha Belikova

At least two sales of Ukrainian corn cargoes into Vietnam have been reported by trade sources in an example of a rare arbitrage that highlights the Black Sea's increasingly competitive pricing for prompt grains despite the turbulent backdrop of potential conflict.

The sales come as weather issues in South America and world market reaction to the escalation in the geopolitical conflict in the Black Sea region has meant values in other origins have moved higher.

However, in the Black Sea, Ukrainian corn prices have held stable and have now emerged as among the most competitive.

The trades were said to have been done for prompt shipment with delivered price ideas thought to be in the range of $343-350/mt CFR Vietnam, although trade sources did not disclose the buyer’s name.

“I heard two vessels of Ukrainian corn traded in the last week and some sellers are now checking demand to consider operating more. Ukrainian corn now is $5-10/mt cheaper compared to South American corn recently and quality was better than other origins such as Indian or Myanmar,” a Vietnam-based trader told Agricensus.

At the same time, a bid appeared on the FOB basis for Ukrainian and Russian corn with Vietnamese specifications at $289/mt FOB basis a panamax in a panamax port (PIPP) for March shipment in a move that seems to confirm there remains buying interest in the market.

Vietnam last took delivery of Ukrainian corn back in May 2020, export data shows, with Vietnamese importers typically looking to South America - particularly Argentinian corn - augmented by US and sometimes more locally sourced Indian or Myanmese corn. 

Ukrainian corn is also only imported under a 2% import tax, unlike Argentinian and Brazilian origins. 

Vietnamese buyers have also bought corn from Myanmar in recent days, with delivered prices heard at around $345/mt CFR and around $300/mt FOB.

That comes as in addition to already existing weather issues in South America, which have kept international corn prices firm as the trade eyes the impact of drought conditions on potential yields and output.

Alongside that, the escalation of the conflict between Russia and Ukraine - with President Vladimir Putin ordering Russian troops into two breakaway provinces of Ukraine this week - sending world corn prices sharply higher.

But while Argetinian FOB Up River prices have gained 11% in the last month, Ukraine's FOB corn market has climbed just 4% over the same period, making it among the cheapest origins globally, with offers for panamax cargoes in a panamax port heard at around $295/mt.

However, the trades were also completed before President Putin delivered a fiery, televised speech where he recognized two breakaway regions of Ukraine as independent states and before Russian troops were sent in to the regions.

That has since prompted a further escalation in tensions and means further trades could face bigger risk - not least from the fear of disruption to either country's logistics and supply chain.