In each of the months of June and July, the European Union imported under a million metric tons of corn. The last time monthly import volume was below this level was in September 2017. In conjunction with lower EU import volume, Ukraine reported its smallest July export volume since 2015/16 at under half a million tons. For much of the last decade, the EU and Ukraine have tended to be each other’s largest trading partners for corn.
Export bids for Black Sea feed corn have been elevated above competing U.S. and South American quotes from mid-April through the end of August, ranging from $10 to $25/ton higher. Ukraine’s export volume tends to wane in June as domestic supplies taper down and expectations for the new crop begin to materialize. The upcoming 2020/21 crop has been negatively impacted by adverse weather, leading to declines in production size estimates, but is currently still expected to be a record and result in a record 30.5 million tons in exports, up 1.3 million tons over the previous year.
For the EU, anticipation of its own upcoming harvest of corn and negative impacts on hotel, restaurant, and institutional meat demand as a result of COVID-19 may paint most of the picture for the weak July between the two trading partners. Despite this, EU imports are forecast to rise to 24.0 million tons to offset lower expected wheat feeding.
Where has Ukraine’s corn been going in the last several months if not to the EU? The answer is China. Ukraine has been China’s primary supplier of corn since 2014/15. Perhaps reflecting the high domestic corn prices in China, imports of Ukrainian corn are at their highest in the last 6 years.
However, China’s demand for U.S. corn is also robust and Ukraine looks to face increased competition from the United States in the near future. According to U.S. export inspection data, since September 1 corn shipments to China totaled 1.1 million tons, ahead of Mexico at 1.0 million tons, as the largest destination.
Argentina Levels Up Corn Exports
Argentina’s local marketing year 2019/20 (Mar-Feb) corn exports are revised up this month to a record 38.0 million tons1. Cumulative monthly exports from March through August and the Vessels Sailed data for September amounted to 28.2 million tons, about 45 percent higher than the average level of the previous 3 years. While exports and shipments to traditional destinations have been larger, the data also shows non-traditional destinations, namely Iraq, Lebanon, Nigeria and Peru.
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Aside from robust foreign demand, strong exports have been stimulated by the depreciation of the peso against the U.S. dollar. Traders gain by shipping corn overseas over selling it in the domestic market, absent currency controls. Despite the fiscal reforms in 2018, the peso has continued to lose its value.
After the August 2018 primary election, the value of the peso plunged and then steadily depreciated. Since January 2020, the value of the peso has dropped about 30 percent against the U.S. dollar. Strong exports have sharply drawn down stocks. Ending stocks for 2019/20 are expected to be shy of 2 million tons, the smallest since 2015/16. This would constrain later sales.
Exports for 2020/21 are currently forecast at 34.0 million tons, down moderately and limited by a marginal decline in production, expected greater domestic use, and tight carryin stocks. Early corn planting is underway, while late corn is still a few months away from planting.
Corn area is currently forecast to be marginally smaller year-over-year.