Vietnam turns to Ukraine in rare 140k mt corn arbitrage: trade

27 Mar 2020 | Tim Worledge

Fears over Vietnam’s ability to lift corn and other animal feeds from the Americas has resulted in domestic traders booking up to two cargoes of corn from Ukraine in a rare movement, market sources have told Agricensus Friday.

“I heard Ukraine has traded into Vietnam. Two boats for the time being, and buyers asking for more,” one market source said, with importers also said to be looking at US corn as well.

The two positions are for April shipment, with sellers thought to be global agri-majors, although that could not be confirmed at time of publication and at least one source felt the cargoes could be split between Russia and Ukraine.

“For me, it's very possible because it is also a good alternative origin. The last couple of years, no Ukraine product has come to Vietnam,” a second market source said.  

The move would be a rare one, with the Agricensus Export Dashboard showing the last corn volume sold into Vietnam from Ukraine came in November 2017, with one 66,000 mt cargo sailing.

March 2017 and December 2016 saw similar 60,000 mt parcels make the move, but a total of just 194,042 mt has traded between the two nations since 2013, government data shows.

The trading comes after Vietnam’s feed sector expressed concerns over its ability to secure supply of animal feeds like soymeal and dried distillers grains (DDGS), as both the regular supply hubs in North and South America faced supply issues.

Covid-19 fears have been key, with expectations that Argentina’s supply logistics could be snarled by government and worker responses to the outbreak, while US ethanol producers are shutting down production amid a major decline in road fuel demand as people self isolate.

As a by-product of the ethanol production process, DDGS are expected to be hit hard by any shutdown in production and US Gulf FOB cargo offers have disappeared over the last two days amid reports of production facilities shutting down.

Denied those options, Vietnam traders had been looking at Indian and Russian corn supply, with rumours that Russian corn may also have been sold into the country in the last few weeks.