Fragile balance in the corn market: threat of shortage forces buyers to build stocks
The Ukrainian corn market is gaining momentum amid renewed purchases by European Union countries, which are looking for stable volumes. At the same time, limited stocks and reduced acreage in leading producing countries are creating the potential for a shortage on the global market.
Against this backdrop, Ukraine remains a strategic source of supply for Europe, according to the analytical department of the PUSK agricultural cooperative, created within the framework of the Ukrainian Agrarian Council (UAC).
«The main driver in the market is demand for Ukrainian corn from the EU, particularly Greece, Italy, Spain and the Netherlands. This has allowed the market to rise and reach price levels of $225–226/t, which can now be considered a market balance,» analysts noted.
At the same time, the fundamental situation on the global corn market remains tense. The balance between production and consumption remains almost equal, meaning there are no surplus stocks.
«The global corn market is currently balanced — virtually everything that is produced is immediately consumed. Stocks are being formed at minimal levels, which makes the system highly sensitive to any changes in production. Even a slight reduction in the harvest would immediately lead to a shortage. Buyers understand this, which is why they are beginning to act ahead of time. In fact, we are already seeing signs of such behavior,» PUSK explained.
A key risk factor for the new season is the reduction of acreage in leading producing countries. In particular, Romania and France plan to reduce corn acreage, while similar expectations also apply to the United States. Against this backdrop, Ukraine remains a critically important supplier for Europe.
«European processors are now seriously concerned about the situation with the future harvest. They are actively interested in how much corn will be planted in Ukraine and whether there will be any reduction. After all, the EU is a net importer of this crop and largely depends on supplies from Ukraine and the United States. In fact, these two countries cover up to 75–80% of the market. If Ukraine also starts reducing production, this could create a serious shortage for Europe,» analysts emphasized.
In Ukraine, there is currently no trend toward a reduction in acreage. On the contrary, a slight expansion of 300–500 thousand hectares is expected. At the same time, weather conditions will remain the decisive factor.
«Indicative prices for the new crop are already being formed at $218–220/t CPT, while some forward contracts have been concluded at $223–224/t for delivery in October–November. This indicates growing concerns among traders about a possible shortage. In the longer term, the market shows growth potential. According to estimates, the average price in the new season may reach $240–245/t CPT, although this level is likely to be realized closer to the second half of the marketing year,» PUSK forecasts.
At the same time, analysts do not recommend rushing into forward sales, given the high level of uncertainty regarding the harvest and weather conditions.
