Platts to launch corn arbitrage price matrix, associated assessments

S&P Global Platts will launch a daily global corn arbitrage price matrix to reflect the competitiveness of each major export origin delivered into Asia, the world's largest corn import region. The corn arbitrage price matrix will launch on Sept.3, 2020, and will include the existing and new price assessments.

The price matrix will reflect the replacement values and profit margin calculations associated with the import of feed corn from the US Gulf Coast, the US Pacific North West, Brazil, Argentina and Ukraine at destination in Northeast Asia.

The existing Platts corn CFR North East Asia price assessment is basis Pyongtaek, South Korea. Platts understands that the South Korean corn purchase price is widely used in the market as a reference price for purchases done by neighboring countries in Asia such as Japan, Taiwan, Vietnam and China.

Together, these five countries constitute the largest importing hub in the world, with 29% of global corn imports on average over the past five years and an estimated 49.6 million mt of corn to be imported in the 2019-20 marketing year ending Sept. 30, according to the US Department of Agriculture.

The corn arbitrage price matrix will reflect the most recent global assessments available at the 4:30 pm Singapore time (0830 GMT) daily, in line with the Platts Market on Close assessment process timestamp of the existing Platts corn CFR North East Asia assessment.

As part of this matrix, Platts will launch the following corn assessments on Sept.2, 2020:

1. New corn assessments:

1.1. FOB US PNW assessment

The daily FOB US PNW corn assessment will reflect Panamax cargoes of 60,000 mt (+/- 5% operational tolerance) loading two calendar months forward from the US Pacific Northwest ports of Seattle, Tacoma, Longview, Kalama, Vancouver and Portland. This will roll to the next calendar month on the first publication day after the 15th of each month. For example, from Sept.16-Oct.15, Platts will assess cargoes in December; on Oct.16, this will roll to January-loading cargoes. The assessment will reflect the tradable value at 4:30 pm Singapore time.

The assessment will reflect US yellow corn Number 3 as specified by the US Federal Grain Inspection Service.

The assessment will be published in US dollars/mt, as well as a US cents/bushel differential, or basis, to the prior day's CBOT corn futures settlement price. The relevant futures contract month letter code will be published next to the basis value.

1.2. Argentina corn FOB Panamax cargo

The Argentina export cargo assessment will reflect two-port loading Panamax cargoes of 60,000 mt (+/- operational tolerance) loading at an Up River port not above Timbues, with a top-off at the ports of Necochea or Bahia Blanca at the seller's option.

The assessment will reflect product meeting GAFTA grade 2 corn specification loading one calendar month forward. This will roll to the next month on the first publication day after the 15th of the current month. For example, from Sept.16-Oct.15, Platts will assess parcels loading over November, while from Oct.16-Nov.15, Platts will assess parcels loading over December.

Platts will assess a weekly Panamax cargo differential to its existing Argentina corn FOB Up River assessment. The weekly differential will be published in US cents/bushel and reflect the tradable value at 5:30 pm Sao Paulo time every Wednesday, or the next publishing day if Wednesday is a pricing holiday.

The Argentina corn FOB Panamax cargo assessment will be published daily in US dollars/ mt, by applying the weekly Panamax cargo differential to the existing daily Argentina corn FOB Up River assessment. The Argentina corn FOB Panamax cargo assessment will also be published as a US cents/bushel differential, or basis, to the CBOT corn futures settlement price.

1.3. FOB US Gulf Coast cargo

The daily FOB USGC assessment will reflect Panamax cargoes of 60,000 mt (+/- 5% operational tolerance) loading from the US Gulf Coast, basis New Orleans, two calendar months forward. This will roll to the next calendar month five publication days before the end of the month.

For example, on Sept. 2, Platts will assess FOB USGC cargoes loading in November; this will roll to December-loading cargoes on Sept. 24.

The assessment will reflect US Yellow Number 2 corn as specified by the US Federal Grain Inspection Service, but with a maximum moisture content of 14.5%.

In the absence of pricing data on an FOB USGC basis, Platts will consider pricing data for associated markets such as the CIF New Orleans delivered barge market factoring in elevation costs.

The daily assessment will reflect the value at 1:30 pm Houston time. Platts will publish the US corn FOB Gulf Coast cargo assessment in US dollars/mt, as well as a US cents/bushel differential, or basis, to the CBOT corn futures settlement price. The relevant futures contract month letter code will be published next to the basis value.

2. New calculated corn assessments

2.1. FOB Black Sea corn (Ukraine) PMX

The daily assessment will reflect Panamax cargoes of 60,000 mt (+/- 5% operational tolerance) loading 28-42 days forward from the Ukrainian ports of Odessa, Yuzhny and Chornomorsk.

The assessment will be calculated by adding a fixed differential of $2/mt -- reflecting the premium for loading a Panamax-sized cargo -- to the existing FOB Black Sea corn (Ukraine) assessment, which reflects Handysize cargoes.

The Panamax assessment will reflect product meeting the same specification as the existing FOB Black Sea corn (Ukraine) assessment.

Net forwards and Margin calculations

2.2. US Gulf CFR NE Asia Corn Replacement:

Will be calculated by adding the FOB US Gulf PMX assessment to the freight assessment PP35 New Orleans, US Gulf Coast to Qingdao, North China

2.3. US PNW CFR NE Asia Corn Replacement:

Will be calculated by adding the FOB US PNW corn assessment to the freight assessment PP43 Vancouver, West coast Canada to Pyeongtaek, South Korea

2.4. Brazil CFR NE Asia Corn Replacement:

Will be calculated by adding the Brazil corn FOB Santos assessment to the freight assessment PP26 Santos, Southeast Brazil to Qingdao, North China

2.5. Argentina CFR NE Asia Corn Replacement:

Will be calculated by adding the Argentina Corn FOB PMX assessment to the freight assessment Bahia Blanca, Argentina to Qingdao, China

2.6. Ukraine CFR NE Asia Corn Replacement:

Will be calculated by adding the FOB Black Sea corn (Ukraine) PMX assessment to the freight assessment Odessa, Ukraine to Qingdao, China.

2.7. US Gulf CFR NE Asia Corn Margin:

Will be calculated from Corn CFR North East Asia assessment minus the US Gulf CFR NE Asia Corn Replacement.

2.8. US PNW CFR NE Asia Corn Margin:

Will be calculated from Corn CFR North East Asia assessment minus US Gulf CFR NE Asia Corn Replacement.

2.9. Brazil CFR NE Asia Corn Margin:

Will be calculated from Corn CFR North East Asia assessment minus Brazil CFR NE Asia Corn Replacement.

2.10. Argentina CFR NE Asia Corn Margin:

Will be calculated from Corn CFR North East Asia assessment minus Argentina CFR NE Asia Corn Replacement.

2.11. Ukraine CFR NE Asia corn Margin:

Will be calculated from Corn CFR North East Asia assessment minus Ukraine CFR NE Asia Corn Replacement

Platts is also launching the following new freight assessments, which will be published in the matrix:

- Freight Argentina to Pyeongtaek, South Korea freight rate: Subnote Link

- Freight Ukraine Panamax Port to Pyeongtaek, South Korea freight rate. Subnote Link

The following existing assessments will be used in the matrix:

1. Corn CFR North East Asia
2. Brazil corn FOB Santos
3. Argentina corn FOB Up River
4. CIF New Orleans corn M2
5. FOB Black Sea corn (Ukraine)
6. Freight route PP26. Santos, Southeast Brazil to Qingdao, North
7. Freight route PP35. New Orleans, US Gulf Coast to Qingdao, North China
8. Freight route PP43. Vancouver, West coast Canada to Pyeongtaek, South Korea

Please send any feedback, questions or comments on the corn arbitrage price matrix and the new corn to ags@spglobal.com and pricegroup@spglobal.com.

For written comments, please provide a clear indication if the comments are not intended for publication by Platts for public viewing. Platts will consider all comments received and will make comments not marked as confidential available upon request.