Recent buying out of Asia’s key destination markets suggests corn buyers are broadening the slate of potential supply options, with the Black Sea and South Africa making inroads into a supply matrix that has been dominated by the Americas.
But traders warn that with strong freight values and relatively limited supply available, any bargains could be quickly exhausted, while competitive feed wheat prices are likely to limit end-user demand to just basic inelastic buying.
“Corn is actually losing ground to feed wheat again,” one Asia-based trade source said, but with much of the destination demand now focused on later dates, the supply options have at least opened up, with North and South America losing ground.
Widening the gap
AgriCensus data shows that the gap between corn and feed wheat out of Ukraine has widened, with APM-1 for Ukrainian feed wheat assessed at a $45-per-tonne discount to APM-11 Ukrainian corn, from parity in early March.
Later loading dates show that feed wheat retains that price advantage right into the new crop corn loading months as well, with feed wheat still assessed $17 per tonne below corn out as far as April 2022.
During the week through July 2, private buying for one of South Korea’s feed making groups resulted in a 65,000-tonne purchase of Black Sea corn, while China was rumored to be in the market for Ukrainian corn for several days.
“Yes, there were some trades recently to China,” one Ukraine-based source told AgriCensus, with at least two vessels said to have been booked before Chicago corn futures prices charged higher earlier during that week.
“Within corn, Black Sea is competitive everywhere today. It’s now selling at $290 [per tonne] CNF Korea means it’s very far from the current replacement cost at £325-330 [per tonne],” the first trade source said.
A strong start for South Africa
Alongside that, Taiwan purchased corn from South Africa at another tender during the same week, with both seemingly indicating that a long period of US and Argentinian supply dominance is coming to an end.
“The US Gulf is totally out of the game for the time being, PNW calculates well into Japan for October, November and December thanks to freight spreads… Argentina captures all July, August and September demand,” the first trade source said.
South Africa has already seen a strong start to its local marketing year, with yellow corn exports already standing at 535,000 tonnes since the beginning of May, according to data from the South African Grain Information Service.
That’s almost double the same period of 2020, a year in which the country went on to export 2.5 million tonnes of yellow and white corn, making it one of the biggest exporting years since the early 1980s, according to US Department of Agriculture data.
Already this marketing year, 215,000 tonnes of yellow corn has been exported to Vietnam, double the entire slate for 2020-21, with another 100,000 tonnes each headed to Spain and Taiwan.
But although South African corn loading in September or early October was expected to be supplied into a Taiwanese tender, the Asia-based trader said that it was the exception, with much of the early marketing year export volume booked in months earlier.
This article, by Tim Worledge and Masha Belikova, was first published to agricensus.com on Friday July 2.
With strong freight values and limited supplies available, how long will the bargains last?