Ukraine’s corn harvest is underway, but persistent dry weather during the summer has reduced the country’s production potential. That could force China to increase imports of corn from the United States to make up any shortfall.
The Gro Drought Index indicated widespread dryness across Ukraine throughout the growing season. Industry estimates are now as low as 30 million tonnes versus the current USDA’s prediction of 38.5 million tonnes (last year’s harvest was 38 million tonnes). Gro’s current estimate for Ukraine corn production is 35.2 million tonnes.
Ukraine’s corn production has grown fourfold in the last 10 years, supported by both land expansion and yield improvement. Exports too have grown in size, with China’s reliance on Ukraine ever increasing. However, in a year in which China’s feed grain imports are on the rise, production shortfalls in Ukraine will most likely result in increased shipments from the United States.
More than half of Ukraine’s corn exports head to China, with the rest going to the EU, Egypt, and South Korea. FOB prices of Ukraine corn have appreciated 20% versus this time last year, and are up 10% from the start of the growing season. FOB prices are an important factor in projecting corn balance sheets.
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