USDA report on Ukraine’s grain crop turned out to be optimistic

Over 23.4 MMT of corn was exported from Ukraine in September-July that is 19% less than last season, but 3% above the five-year average.

For a third month in a row, the EU has been purchasing more corn from Ukraine than China, therefore the EU’s share in Ukrainian corn exports has risen to 31%.

Based on the results of the first month of MY 2021/22, Ukraine’s share in corn imports to the EU increased to 35% (in the EU, the season begins from July) at the expense of reduced shares of Canada, Serbia and others. According to the European Commission, Ukraine has become the main corn supplier of the EU in MY 2020/21, with its share in July-June equaling 43%.

Exports hardly will reach the limit of 24 MMT set under the Memorandum, although there is no more demand for Ukrainian old-crop corn, previously contracted corn is still being shipped, therefore UkrAgroConsult is raising its estimate of 2020/21 exports.

The increase in exports will have no adverse impact on the size of ending stocks, because feed use of corn fell because of its high price (over the past 4.5 months, corn has been more expensive than feed and milling wheat).

We expect that domestic price of this commodity must fall after growers begin harvesting the new corn crop (which, at a conservative estimate, will be up 7 MMT from last year). This also must increase pressure on wheat and barley prices, because new grain arrivals will force Ukrainian farmers to speed up sales of early grains. At the same time, the global market will continue its bullish influence (a crop decline in Brazil because of drought and frosts, corn crop deterioration in the U.S. compared to last year because of moisture shortages).