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Corn: could prices persist against an expected nosedive trend?

August 25, 2017 at 11:57 AM , Starry Night Ltd.
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Local prices remain quite strong on the background of tough regional competition. The result is sluggish exports so far in the year. Farmers are doubtful prices will stay strong after harvest begins.

Corn: trade is active on the domestic market

SOFIA. Domestic trade supports the higher price so far in the season. By the third week of the month, domestic consumption reached 1,199,000 mt, as 767,000 mt were used for feed while the rest went for food and industrial usages.

The high export turnover of wheat from harvest 2017-18 in the Black sea region so early in the marketing season, to an extent, further negatively affected local exports of corn within the region. Corn is used as a substitute for feed wheat in the animal stock sector and when prices of the latter crop are highly competitive, as has been the case recently, foreign buyers choose between alternatives.

In the realm of prices

Soon, farmers might face much tougher regional competition. Although corn output in the EU member countries is estimated to reach 60 mmt, according to a recent USDA report on World Agricultural Production, down by 1.85% from last year, regional competition from the big regional exporters in the Black sea basin -- Russia and Ukraine -- will definitely exert pressure on local prices. Even more so since, according to another USDA report on EU Increases Grain Quotas for Ukraine, the EU raised the annual quotas of duty-free Ukrainian corn by 625,000 mt, reaching a total of 1,025,000 mt. The expected push-down effect on local prices might well persist beyond the short-term!

Corn, Bulgaria

Crop

EUR/kg

corn

0.147

EXW Bulgaria

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