Ukrainian, Romanian corn nearing parity amid weaker demand

The price spread between corn trading from Pivdennyi-Odessa-Chornomorsk ports in Ukraine and the Constanta-Varna-Burgas hub in Romania and Bulgaria narrowed to $1-$2/mt Feb. 12, from $30-$31/mt at the same time last year, as it approaches parity due to a decline in demand for corn from these countries.

Platts, part of S&P Global Commodity Insights, assessed Ukraine corn FOB POC at $227/mt and Romanian, Bulgarian and Serbian origin corn FOB CVB at $229/mt for March loading on Feb. 12 this year, compared with a respective $161/mt and $192/mt on the same day in 2024.

"Prices have recently come almost on par," a trader from Bulgaria said.

The premium for corn exported from ports in Romania and Bulgaria was primarily attributed to the freight advantage, especially following the onset of the war in Ukraine. Traders in Romania said the country's corn was considered expensive due to speculative positioning rather than actual demand from buyers.

"Freight costs from Ukraine to various destinations have risen during the war, while freight from [the Romanian port of] Constanta is more competitive, contributing to the premium in FOB prices," a trader from Ukraine said.

These freight costs mainly drive the price difference between Odessa and Constanta. However, with the establishment of the grain corridor, Ukraine has managed uninterrupted exports for the past 10-11 months, prompting owners to become more willing to enter the Ukrainian market. This has contributed to the narrowing of the price gap between Ukraine FOB and Constanta FOB prices. Traders also said that before the war, Ukrainian prices were comparable to or slightly higher than those of Romania and Bulgaria, due to their ability to load Panamax vessels and their freight advantages.

Moreover, the quality of corn from Romania and Bulgaria has been severely affected by high toxin content, which has hit corn demand. The lack of competitiveness due to quality concerns has forced sellers in the CVB market to lower their offers significantly to attract buyers, leading to a reduction in premiums and price spread.

"There is no good premium for CVB, probably because of the aflatoxin problem this year," another trader from Ukraine said.

"At the moment, we see little demand, and therefore, CVB cannot command a premium," a third Ukraine trader said. "There is no significant difference between them at this point, as owners perceive less risk these days when sailing to POC."

This situation has been compounded by the high demand and competitiveness of Ukrainian corn in destination markets, which has resulted in a price surge for Ukrainian-origin corn.

"The price spread seems narrow, but with the aflatoxin problem, we prefer Ukraine," a buyer from Spain said.

Furthermore, the CVB market, which used to be priced at a premium over Chicago Board of Trade values, has recently been seen as independent of CBOT movements for the old crop.

"Though CBOT was down, the physical market did not react," a market participant from Romania noted, highlighting the shifting pricing dynamics in the CVB corn market.

Market participants expect CVB-origin corn to gain momentum in the new season and anticipate corn quality being less affected by toxins. Prices for the new season corn are already visible in the market, reflecting premiums over CBOT.