China's Ukraine corn buying burst blunts US prospects for phase 1

Posted by Marina

Softer corn prices have stirred Chinese interest for Ukraine corn, with up to six cargoes – almost half a million mt of corn – booked this week, sources have told Agricensus.

The buying comes just days ahead of a key February 14 date, when the rollback of some US-China tariffs as part of the phase one trade deal is expected and which could have catalysed US-China trade.

"About five or six cargoes, I believe were sold to China for February-March loading in the last two-to-three days," a broker said, with the move appearing to blunt the prospect of China buying US corn in the near future.

Other trade sources agreed that trading activity for China in the Black Sea renewed this week, with price levels reported in the $212-215/mt CFR range.

"The demand is not massive, but it is still more active compared to the previous week," a trader said.

The moves come after Ukraine's FOB Black Sea market has seen prices soften in recent days, as the weight of offers after a second consecutive huge harvest began to drag down prices that had drawn support on strong domestic CPT prices and a healthy export programme.

"The price drop certainly provoked higher demand, plus people in China have started to work more and we see more demand for March and May," a second broker added, throwing doubt on Chinese purchases of US corn.

"It has nothing to do with China-USA. I don't think China will buy corn in the US any time soon, to be honest," the first mentioned source said. 

Prices for Ukrainian corn have dropped over the course of the week by around $3/mt with offers for March loading heard at $181/mt and for April at $184/mt on FOB HIPP basis.

That's down by around $3/mt each since the end of last week as corn prices globally have eased and amid a slowdown in demand for Black Sea.

Chinese interest began to be felt last week after the country returned from an extended Lunar New Year holiday, but slow activity was reported with buyers initially deterred by the relatively high Black Sea prices, while the US had taken back some market share in Asia destination markets.

Ukraine remains the number one supplier to China, with line-up data showing 1.7 million mt was shipped between September 2019-January 2020 period, while around 316,000 mt is currently nominated for February loading, as of February 10.

In the 2018/19 marketing year, China imported a total of 3.84 million mt of corn from Ukraine, according to the official customs data.

"It's interesting to me that the Chinese are on a buying move for Ukrainian corn. Private buyers won't buy US, they prefer Ukraine," a third trade source said.

"I've been told there are about 500,000 mt of quotas still left, and that should be rewarded to Ukraine suppliers," the third source said. 





Source: Agricensus