Spain shows strong appetite for Ukrainian corn in first 6 months of MY 2023-24

Spain, Europe's leading corn importer, showed robust demand for Ukrainian corn in the current marketing year 2023-24 (October-September), as the country's import of Ukrainian corn was up 68% in the first six months of MY 2023-24 from the volume imported in the same period of MY 2022-23, data by S&P Global Commodity Insights showed.

Strong Spanish feed demand is one of the major drivers behind the rise in Ukrainian corn prices.

Platts, part of Commodity Insights, assessed Black Sea corn at $207/mt May 30, a 10-month high, when it was seen at $210/mt on July 28, 2023.

Typically, Ukraine and Brazil dominate the Spanish corn market. However, in MY 2023-24, Spain's feed demand -- which makes for 75% of total Spanish grain demand -- increased its reliance on Ukrainian corn.

March marked the midpoint of the marketing year for corn in Europe. So far in MY 2023-24 -- from October to March -- Spanish imports reached 5.5 million mt, Commodity Insights data showed. This figure is slightly lower than imports for the same period last year, but it significantly surpasses the volume imported in the first half of the seasons in 2021-22 and 2020-21.

Strong imports in the current and previous marketing years have been largely due to smaller wheat and corn crops in Spain on the back of consecutive severe droughts.

In the first six months of MY 2023-24, Spain's corn imports from Ukraine accounted for 3.3 million mt, which is 1.3 million mt more than the imports during the first half of MY 2022-23 and only 198,000 mt less than the total Ukrainian corn purchases by Spain in the entire last marketing year, Commodity Insights data showed. In contrast, Spain's corn imports from Brazil totaled only 791,000 mt, less than half of the 2.1 million mt imported during the same period in MY 2022-23.

Spain typically buys Brazilian corn at the opening of the marketing year in October and during the end of the season in July, August and September -- when the second corn crop becomes available. Ukrainian corn usually provides a steady supply throughout the marketing year, with peaks typically occurring between November and January.

However, in the first half of MY 2023-24, Spanish purchases from Ukraine have consistently been above the average of the last five seasons, while imports from Brazil have remained below average and far behind 2022-23 figures, Commodity Insights data showed.

In MY 2023-24, the relative prices of feed wheat and corn have played an important role in the purchasing decisions of Spanish consumers and higher prices for Ukraine corn.

"The rise in feed wheat prices is steering the Spanish meat industry toward continued purchases of feed corn," said a major corn trader in Spain.

The strong demand from Spain, which is estimated to import a total of 10.4 million mt of corn by the end of the marketing year according to Commodity Insights, puts maximum pressure on Ukrainian corn stocks.

As of May 13, stocks in Ukraine dropped to 3.6 million mt, down compared with the levels seen a year ago, Ukraine-based market sources said.

However, "most of these stocks are already booked, leaving only 1 million mt or less available for trading," according to a Ukraine-based broker. Some of these bookings are destined for Spain, but the broker said that besides low stocks, "cargo origination is expected to face challenges in June and the first half of July, as the country typically shifts its focus from spot trading corn to new crop wheat and barley."

Looking ahead, Spanish buyers are already showing significant interest in Brazil's second corn crop, known as safrinha, set to flood the market in July. Other origins are also expected to supply Spanish demand until the new European crop arrives. For instance, on May 21, US private exporters reported selling 110,000 mt of corn for delivery to Spain in MY 2023-24.

The recent surge in Platts Black Sea assessment represents a significant recovery from the low point of $150/mt on Feb. 26, when corn prices globally experienced widespread weakness due to expectations of abundant supply.

Notably, the February price was the lowest recorded since the assessment began on March 17, 2014. This assessment is for a 25,000-mt cargo of corn shipped 28-42 days from the date of publication from Pivdennyi, Chornomorsk and Odessa, Ukraine -- three Panamax ports that were closed for most of 2022 following Russia's invasion of the country.