Abundant US corn supply might hurt Ukraine's harvest

Dropping corn prices in Brazil and the US, the leading corn suppliers globally, are resulting in disruptions to the Black Sea corn market. In Ukraine, the world's fourth-largest corn exporter, farmers have been slower than usual to sell their new corn crop forward, which is due to be harvested in September.

Brazil and the US provided a combined total of 107 million metric tons of corn in the marketing year 2023-24 (September-August) out of a global total of 201 MMt, according to US Department of Agriculture data.

In the US, Platts assessed US corn FOB Gulf Coast Panamax prices two calendar months forward at $179.72/mt, the lowest since September 2020. The decline in US prices is attributed to strong US corn production and ample supply, leading to lower premiums and prices in the global market.

Sellers from Ukraine, which shipped 27 MMt of corn in the marketing year 2022-23 (October-September), are now offering at around $208-$209/mt for shipment in September. In October, when the new crop is available for shipment, the offer is at $203-$205/mt, despite low production prospects due to dry weather.

"The harvest and drop in global corn prices should affect prices in Ukraine but may also lead to slower selling by farmers," said one Ukraine-based trader.

Major exporters in the country are hesitant to offer new crops, unsure if farmers will sell enough. Another trader commented, "It's not a big problem for them (farmers) to wait."

In destination markets, competitive pricing from US and South American sources has reduced demand for Ukrainian corn. While traders hope for a reversal with the new crop harvest, its unavailability may prolong the situation in major markets like Spain and Egypt.

Traders anticipate that Ukrainian corn prices will need to decrease to remain competitive. One Ukraine-based trader stated, "We have to lower prices to be more competitive, but farmers may react negatively."

On Aug. 20, Platts assessed the price of a 25,000-mt cargo of corn at $201/mt FOB POC, Ukraine's three Black Sea ports, down from $203/mt a year earlier. Black Sea corn prices hit a four-year low in February and remain lower than at any point between 2021 and 2023. However, prices have risen since then, with some Ukrainian farmers anticipating a smaller crop in 2024 and stronger prices.