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Ukraine’s High Corn Yields to Pressure U.S. Export Business

A record-high crop coming out of the old world country, analyst says.

KIEV, Ukraine-- Ukraine, the largest corn exporter in the eastern world, has started to harvest its new crop.

While it’s early in the season, the yield reports are coming in on the high side.

With more corn being pushed into the global export pipe, the U.S. farmers may see increased competition in that arena in 2019 and 2020.

Ukraine’s starting corn average yield is 95 bushels an acre (6 mt/ha), 8% above last year. Ukraine has harvested 3% of its corn acreage as of Sunday. So, yield figures will change, but there are good chances that the country’s crop is likely to be record-high.

The Ukraine-based The Sizov Report estimates the new crop at 1.4 billion bushels (36.3 million metric tons (mmt), compared with the latest USDA estimate of 36 mmt, and 1% above the 2018 record.

Until late August, when dryness somewhat damaged the yield potential of late-planted corn, the weather conditions were generally favorable for the new crop.

The good Ukrainian corn crop could put pressure on other corn producers, including the U.S. farmers. With low domestic consumption and no ethanol industry to absorb the excessive supply, big crops in Ukraine convert into big exports.

Typically Ukraine ships abroad 70% to 80% of its corn crop. This season the country is expected to export 1.16 billion bushels (29.5 mmt vs. USDA’s estimate of 30 mmt) of corn, which is close to the previous season’s record.

At the same time EU, the largest market for Ukraine, is expected to significantly cut corn imports this year, by 13% to 0.8 bln bu (21 MMT), due to the good wheat crop, part of which will go to feeding. For Ukraine, this may be partly offset by larger Chinese imports forecasted by USDA to rise from 182 million bushels (5 MMT) to 255 million bushels (7 MMT) on a lower domestic supply.

China is another top destination for Ukraine.

However, even with bigger Chinese shipments, Ukraine still could have an extra exportable surplus that needs to find a market. Those markets are likely to be found also in Asia, including such important buyers of U.S. corn like South Korea (USDA: 0.4 bln bu; 10.5 MMT annual imports) and Japan, the largest world corn importer, which is expected to buy 0.6 bln bu (15.6 MMT) this season.

Japan is the second-largest buyer of U.S. corn and South Korea is the fourth largest. Ukraine used to supply corn to those countries in the past, but in limited volumes. This season, it could try to enter those markets again.

Despite the projected decrease in corn exports from South America, U.S. corn farmers could see Ukraine sell its ample supply into Asia.

Andrey Sizov is the managing editor of The Sizov Report on the Black Sea grain market.

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