Corn: Staying attuned to regional developments
December 29, 2017 at 1:48 PM ,
Starry Night Ltd.
BULGARIA. Right before harvest 2017-18, supply expectations rose quite steep, with production forecasts reaching in the range of 2.5 – 2.6 mmt. Weather conditions favored the growth of corn during the Spring and early Summer, and farmers expected a much higher yield. Their hopes bore fruit and average yield was appraised at 5.78 mt/ha or 9.9% higher on a year-to-year basis. However, the most recent estimates, released by the Ministry of Agriculture, place aggregate output at 2,315,387 mt, collected from a 95.70% harvested area.
Corn: strengthening of local prices depends and on regional developments
Local market players are quite realistic that sudden hikes in the price of corn, supported by periods of stable exports, are beyond real in the short-term. Yet, weekly price gains allow the tracing of a shyly, but upward moving trajectory so far in the marketing season. Whether the trend will continue depends to a great extent on regional market developments within the Blacks sea basin. According to the recent USDA report on World Agricultural Production, Ukrainian and Russian farmers have realized 25 mmt and 14 mmt, respectively, recording a reduction of quantities produced from those of last year by 3 mmt and 1.31 mmt, correspondingly. Such a decrease in outputs will definitely negatively affect the export potential of the aforementioned nations. On the other side of the spectrum, according to the Ministry of Agriculture of Romania, the country collected at least 14.5 mmt of corn, which is much higher than realized quantities from last year.
|
Harvest 2017-18 (01.09.2017 - 22.12.2017) units in MT |
|
|
Beginning availability |
580,000 |
|
Aggregate output |
2,315,387 |
|
Imports |
5,683 |
|
Domestic consumption |
405,000 |
|
food & industrial usage |
150,000 |
|
Feed |
255,000 |
|
Exports to the world |
644,784 |
|
to EU markets |
534,851 |
|
to rest of the world |
109,933 |
Source: Bulgarian Ministry of Agriculture
Will local demand keep its momentum strong?
Whenever the dynamics on the wheat market favor feed wheat, local mills turn to corn instead to satisfy the demand of the animal feed industry, for instance the pork sector. If the trend on the wheat market continues to be as strong as it has been so far in the season, increased domestic consumption of corn as feed for animal stock will grow substantially by the end of the marketing year. A case in point, by the 22nd of December 2017, corn used for feed amounted to 255,000 mt; the figure is by 22.60% higher on a year-to-year basis. In addition, on the domestic market, corn is used for food mainly by the starch industry while industrial usage focuses on ethyl alcohol production. Domestic demand is forecasted to keep its upbeat trend, going into 2018. A few days ago, corn was traded at 0.137 EUR/kg EXW.
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