COMMODITIES 2025: Ukraine corn exports to sink in 2025 on tight supply as drought affects harvest

This is part of the COMMODITIES 2025 series where our reporters bring to you key themes that will drive commodities markets in 2025.

Ukrainian corn exports are likely to see significant drop in marketing year 2024-25 (July-June) amid limited availability and lower production this season due to crop failures caused by severe drought.

According to S&P Global Commodity Insights estimates, Ukraine's corn exports in MY 2024-25 is pegged at 21 million mt, 29% lower from MY 2023-24 and down 23% from MY 2022-23.

Ukraine experienced extremely hot and dry weather from late June to early September, which adversely affected the yield potential of corn crops, resulting in lower harvest this season. The country is projected to produce 25 million mt of corn, down 7.5 million mt or 23% compared with last year.

"This is the lowest figure since 2017," a Black Sea grain market expert said.

The significant reduction was mainly due to an 18% decrease in yields to 6.4 mt/hectare amid unfavorable weather conditions. A slight drop in sown areas by 1% to 4.1 million ha also had an impact, an analyst said.

As of Nov. 29, farmers harvested 24.2 million mt of corn from 3.8 million ha of land.

Moreover, according to the USDA's Foreign Agriculture Service, corn beginning stocks in MY 2024-25 were at minimal levels, falling to 200,000 mt from 2.8 million mt in MY 2023-24, further indicating limited supply.

"By the beginning of MY 2024-25, Ukraine managed to export all transitional corn stocks formed in previous periods due to export restrictions by Russian troops," an analyst said.

"If weather conditions remain favorable, Ukraine corn crop production may reach over 31 million mt in MY 2025-26," Commodity Insights senior grains analyst Victoria Sinitsyna said.

Exports to continue at rapid pace

Despite ongoing Russian attacks on its ports, Ukraine has rapidly increased its grain exports this year following the establishment of its own Black Sea corridor in August 2023.

A Kyiv-based trader said, "Ports are operating normally, unlike last year."

According to the Ministry of Agrarian Policy and Food, as of Dec. 13, Ukraine exported 19.36 million mt of grains in MY 2024-25, up 4.6 million mt from last year. Of this, 7.97 million mt were corn, up 8.4% year over year.

Moreover, reliance on its own deep-sea ports led to a 52% year-over-year decline in the previously significant route through Constanta in the first 10 months of 2024, the port authority said.

Corn exports from Ukrainian ports are expected to continue in the coming year, with port operations expanding despite frequent attacks on ships and port infrastructure.

"The Russian military has not stopped its attempts to attack Ukrainian maritime infrastructure. However, the Ukrainian Armed Forces control the export route. In the future, the situation will depend on the course of hostilities," a market expert said.

Key destination demand may rise

Since the start of MY 2024-25, the EU remained the key destination for Ukrainian corn, with 60% of shipments going to EU countries like Spain, Italy, the Netherlands, Germany and Belgium, among others. The region is expected to be a competitive market for Ukrainian corn this season.

Eastern European countries, including Romania, Bulgaria and Hungary, faced critical drought conditions this year, impacting corn yields and resulting in reduced production. This led to increased dependence on Ukrainian corn.

A corn importer from Spain said, "The EU only demands non-GMO [corn] from Ukraine."

However, potential competition is emerging from US-origin corn, which has replaced demand in the Spanish market by year-end. Despite this, some traders believe EU importers' focus will remain on Ukraine-origin corn.

Additionally, Ukrainian corn is likely to flow to China by next year, possibly in January and February, amid an anticipated trade war between the US and China.

A Kyiv-based trader said, "The focus of Ukraine should be China if they need corn for January and February."

According to market analysts, Ukraine's corn supplies to China in MY 2024-25 have been minimal at only 8,200 mt during July-November, due to an unofficial ban on corn imports currently in place there.

"We expect China to resume corn imports after the [Lunar] New Year, but Ukrainian corn exports to China are still likely to decrease, potentially by several million [metric tons]," a Ukraine-based trade source said.

Prices to remain high

In Ukraine, the purchasing price of corn remains high for the new season. The CPT prices at Ukrainian ports surpassed $200/mt at the start of MY 2024-25. However, the increase in CPT prices at Ukrainian ports is not expected to quickly reflect in FOB prices, as demand remains weak in destination markets.

Nevertheless, prices for Ukraine-origin corn are expected to gradually increase in the coming year, with visible demand from destination market following concerns over a potential trade war by the US with the EU and China.

Growing demand from these destination markets in the upcoming year would potentially give a bullish tone for Ukraine prices in coming months.