Prices for Ukrainian corn unresponded yet to Chicago futures drop

Yuri Gavrilyuk, trader at Spike Trade

According to the August USDA report, planting areas and yield indicators in the U.S. have gone far beyond market expectations, commented Yuri Gavrilyuk, trader at Spike Trade.

By the survey of the key producers, the range of expected sowing areas range from 83.5 to 89.8 million acres, and yield — from 161 to 167 bsh./ac. The report showed 90 million acres with a planned yield of 169.5 bush/acre. In his opinion, both indicators exceeded market expectations.

"This immediately provoked a "limit down" (the maximum amount by which the price of a commodity futures contract may decline in one trading day) for corn right after the opening of the trade session and an additional 17 cents sagging per bushel yesterday (as of August 13, 8:00 p.m. Kyiv time). Therefore, now we are in a completely new reality. The physical market in Ukraine has not yet fully reflected the decline in Chicago and remains more nominal than real. However, the indications of the majority of traders immediately lost USD 7-10 per ton up to USD 150-153 per ton with delivery in October-December," commented Yuri Gavrilyuk.

The expert adds that the WASDE report has recently provoked a lot of discussion in the market. And the August report was no exception. The primary price drivers are not the actual data, but the match of those data with market expectations. According to Yuri Gavrilyuk, the market needed corn sown in the USA and the planned yield most of all. It is from these figures that the U.S. export potential follows.

Previously reported that USDA analysts projected a record corn harvest in Ukraine. Crop yield forecast growth was facilitated by the increase of planting areas and change of weather conditions in Ukraine.