Asian feed mills turn to Ukrainian corn as U.S. quality suffers

* China, S. Korea, Bangladesh take Ukrainian corn for Feb.

* Ukrainian corn prices rise on strong Asian demand

* Supply tightness seen easing in March with Argentine harvest

* Southeast Asian buyers to escape the brunt on domestic supply

By Naveen Thukral

SINGAPORE, Jan 23 (Reuters) - Some key Asian feed makers are having to pay more for higher-quality corn from the Black Sea region as a key traditional supplier, the United States, struggles with a weather-damaged crop.

China, South Korea and Bangladesh have turned to Ukraine for a part of their feed corn demand for February arrival, according to three trade sources and shipping data.

"Ukraine has ample supplies but prices have risen since there is strong Asian demand," said a Singapore-based trader at an international trading company.

Corn from Ukraine, one of the few origins in the world left with top-grade corn reserves, is quoted at $220 a tonne, including cost and freight, for February arrival to South Korea, up about $10 a tonne in a month, sources said.

The U.S. corn crop last year endured a tough growing season, with excessive rains delaying planting in April and a wet harvest damaging crops in August-September.

Benchmark Chicago Board of Trade (CBOT) corn futures are little changed since the beginning of 2020 after closing marginally higher last year.

LOWER QUALITY U.S. CORN

The U.S. corn crop is graded on a scale of one to four in descending order of quality, with the grain traded against the CBOT futures contract falling in the number two category.

"This year there are more number three and number four grades of corn, mainly from the crop that gets shipped through Pacific Northwest ports to North Asia," said a second trader in Singapore.

"Gulf ports are getting better quality, but it is expensive to ship corn from Gulf terminals to Asia."

Ukrainian corn is expected dominate Asian markets in February.

"We note an increase in corn prices, which is largely driven by high export pace...," Ukrainian APK-Inform agriculture consultancy said in a report.

It said traders are offering corn at $180 to $182 per tonne for February delivery, free on board (FOB) at Black Sea ports and at around $184 a tonne, FOB, for March.

In December last year, traders offered corn at around $175 to $177 for January delivery.

Ukraine exported 14.2 million tonnes of corn by Jan. 20 for the 2019/20 season, compared with 11.2 million tonnes at the same time last year, according to the Ministry for Development of Economy, Trade and Agriculture.

About 13 million tonnes of corn is still available for exports this season.

Refinitiv shipping data shows five cargoes carrying nearly 315,000 tonnes are set to depart Ukraine for China in January, and 250,000 tonnes for South Korea. Another cargo is heading for Bangladesh this month, the data show.

The quality supply crunch is expected to ease from March when Argentine corn enters the market, with prices likely to decline from April onwards, traders said.

(Reporting by Naveen Thukral; Additional reporting by Pavel Polityuk in KIEV; Editing by Clarence Fernandez)

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