Ukrainian maize situation for UK feed markets next season: Grain Market Daily

• UK new-crop feed wheat futures continued their decline and fell £2.45/t to £170.70/t yesterday. The drop was echoed in May-22 futures which dropped £2.05 to £176.05/t.
• Germany’s wheat crop next season is forecast to rise 3.8% to 22.98Mt, owing to beneficial weather of late. The German winter rapeseed crop is forecast up 4.6% to 3.67Mt. Both forecasts are from the German Association of Farm Co-operatives.
• China’s pig producers have been urged to maintain production levels despite prices falling below cost of production levels. Live hog prices in China have dropped 60% since the start of the year. Should prices keep falling, farmers could cut herd sizes with a potential impact on feed demand. (Refinitiv)

Black Sea maize is a common sight in UK import programmes, especially in tight supply seasons. With maize markets enjoying a high-price season, will this carry on to new-crop and reduce the pressure that more “typical” maize prices have had on feed markets?

Forward FOB prices for Black Sea maize were quoted at $280.00/t (£198.42/t) for Oct – Nov shipment as of 09 June. Though a forward price, this does set a high ‘price floor’ for domestic feed prices to potentially base off. For context, feed wheat delivered into East Anglia was quoted at £175.00/t for November delivery as at 10 June.

Forecasts for the Ukrainian maize crop sit at 37.50Mt, 22% above the 5-year average, according to the USDA. Of this, 30.50Mt is signposted as an export figure, 25% above the five-year average. If realised, this could be a bumper year for the Ukrainian maize crop.

Due to an initial setback to the planting campaign, it is estimated maize crop development is 25-35% behind last season, according to UkrAgroConsult. Weather forecasts as always will be a key watch point to determine if crop yields have been affected.

The Ukrainian Grain Association recently signed a memorandum with China for ‘co-operation and agricultural development’. This positive relationship is a likely factor in increased Chinese imports of Ukrainian grain. Ukrainian maize shipments to China for Oct-April were at 7.34Mt, significantly higher than the 5.5Mt shipped for the entire 2019/20 marketing year.

Increased Chinese maize demand will likely account for a larger proportion of Ukraine’s maize exports, especially with the recent memorandum enhancing the relationship between the two countries.

From a UK perspective, this could be somewhat beneficial for grain prices, but perhaps less so for feed purchasers. Reduced UK imports of Ukrainian maize could lend support for new-crop barley prices, but only if other options are tight. With wheat making a return to feed rations next season, barley and imported maize demand could waiver should there not be the price incentive to maintain inclusion.

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