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Corn: Are inflationary expectations real?

February 23, 2018 at 11:09 AM , Starry Night Ltd.
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SOFIA. Local prices slowly add incremental value over the long run. Inflationary expectations seem to be in store for later in the season.

BULGARIA. The country is a relatively small regional producer, and as a consequence an exporter of corn. It is not in the club of the much larger exporters, such as Ukraine, within the Black sea basin, who have the market clout to dominate the international arena via their shipped volumes. As a result, local market sentiments have always been attuned to regional market forces.

Corn: are inflationary expectations real later in the season?

According to the Ministry of Agriculture, the average purchasing price of corn rose slightly to 0.141 EUR/kg EXW Bulgaria. So far since the beginning of the marketing season, prices have steadily traced an upward trajectory, stubbornly refusing to lose any incrementally gained value. For comparison, at the beginning of harvest 2017-18, prices started quite low, as in regions within the North, some farmers, fearing a slide onto a bearish trend later in the season, sold at 0.123 EUR/kg EXW storage facilities.  Current prices are still below those of last year this time, which stood at 0.152 EUR/kg EXW Bulgaria, according to local authorities.

       Harvest 2017-18

(01.09.2017 - 16.02.2018)

          units in MT

Beginning availability

580,000

Aggregate output

2,315,387

Imports

7,621

Domestic consumption

605,000

   food & industrial usage

230,000

   Feed

375,000

Exports to the world

691,400

   to EU markets

   574,857

   to rest of the world

   116,543

Source: Bulgarian Ministry of Agriculture

According to the most recent USDA report on Grains: World Markets & Trade, this season’s global ending stocks, as well as those for the EU, are forecasted to be lower. The former are to drop by 13.14% from 229,762,000 mt while the latter are to experience a cut of 10.38% from 7,542,000 mt. Whether the projected lower availability of remaining stocks, coupled with cuts in production figures of the main world exporters of corn on the international market, will call in bulls soon remains to be seen, but slight inflationary expectations seem to be in store for the local market.

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