Lower corn prices have sparked Chinese interest in Ukrainian corn, with up to six cargoes – almost half a million tonnes of corn – booked this week, sources told Agricensus.
The purchase comes just days before the key date of February 14, when some US-China tariffs are expected to return as part of the phase one trade transaction and which could have catalyzed trade between the US and China.
“I believe about five or six cargoes have been sold to China for February-March loading in the last two to three days,” said one broker, with the move appearing to blunt the prospect of China buying U.S. corn in the near future. .
Other trade sources agreed that China's trade activity in the Black Sea has renewed this week, with reported price levels in the range of US $ 212-215/mt CFR.
“Demand is not huge, but it is still more active compared to the previous week,” said a trader.
The moves come after Ukraine's Black Sea FOB market eased prices in recent days as the weight of supplies following a second consecutive large harvest began to depress prices that had attracted support for strong domestic CPT and to a healthy export program.
“The price drop has certainly caused greater demand, plus people in China have started working more and we see more demand for March and May,” a second broker added, casting doubt on Chinese purchases of US corn.
“It has nothing to do with China-U.S. I don’t think China will buy corn from the US anytime soon, to be honest,” said the first source mentioned.
Ukrainian corn prices fell over the week by around US$3/mt, with offers for March loading heard at US$181/mt and in April at US$184/mt on a FOB HIPP basis.
This has decreased by around US$$3/mt each since the end of last week as corn prices have declined globally and amid a slowdown in Black Sea demand.
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 relatively high Black Sea prices, while the US had recovered some market share in destination markets in Asia.
Ukraine remains China's number one supplier, with alignment data showing 1.7 million tonnes were shipped between September 2019 and January 2020, while around 316,000 tonnes are currently tipped for loading in February, as of 10 of February.
In the 2018/19 campaign, China imported a total of 3.84 million tons of corn from Ukraine, according to official customs data.
“It's interesting to me that the Chinese are buying Ukrainian corn. Private buyers don’t buy the US, they prefer Ukraine,” said a third trade source.
“I was told that there are still around 500,000 tonnes of quota left, and this should be rewarded to suppliers in Ukraine,” the third source said.
Source: Agricensus
