Tight supply drives Black Sea corn prices to new highs

Tight supply due to low origination and limited suppliers has led to a surge in corn prices in the Black Sea region, with FOB values at Ukrainian ports -- including Pivdennyi, Odessa, and Chornomorsk -- reaching their highest level of the past 16 months on Oct. 3.

Platts, part of S&P Global Commodity Insights, assessed FOB POC corn at $217, up from $208 week on week and from the year-ago price of $188/mt.

Key global corn exporter Ukraine faces declining production prospects due to a severe drought during the growing season. Commodity Insights analysts estimate Ukraine's corn production for marketing year 2024-25 at 27.2 million metric tons, down 13% from the previous year. As the harvest has progressed, traders have cut their production forecasts further to a range of 22-25 MMt this year.

This reduced output and limited stock have driven up origination prices. The purchasing price of corn on a CPT basis in Odessa was offered at $201/mt, with bids at $196/mt, while CPT prices in Izmail port surged from $144/mt at the end of September 2023 to $200/mt by the end of September 2024.

“It’s not only demand; origination is going up very quickly,” a Ukraine-based trader said.

Firm demand from destination markets, particularly the EU and Middle East, has further fueled prices, with the competitiveness of Ukrainian corn due to favorable freight rates compared with product from South America and the US benefiting these markets.

However, another trader raised concerns about the competitiveness of the Eastern European producer in the global market as prices rise, saying: “When you're short on Ukraine origin, you will have to buy Ukraine origin unless you have optionality with other origins.”

Despite rising prices, the Constanta-Varna-Burgas market remained quiet, characterized by low liquidity, also attributed to low origination in Romania, Serbia and Bulgaria. A Romania-based market participant highlighted that in Constanta there was only a paper market, with physical trade very quiet. Platts assessed FOB CVB at $226/mt Oct. 3.

As the market evolves, stakeholders will need to navigate these challenges and monitor how production forecasts and pricing dynamics impact global corn trade.