Indonesia turns to Ukrainian corn

Indonesia has purchased decade-high volumes of Ukrainian corn this marketing year, with drought in Argentina weighing on upriver shipments and pushing buyers to seek alternative origins.

A 33,000t cargo of Indonesia-bound Ukrainian corn cargo was shipped from Mykolaiv port on 24 January. This followed 27,833t that was shipped along the route in October, according to line-up data, the first such delivery in four years. The 25,108t shipment in 2017 was the first since just over 2,000t was sent to Indonesia in 2012, customs data show.

Indonesia's corn imports increased to 945,000t in 2020-21 (October-September) from 860,000t in 2019-20 and are forecast to rise to 1.2mn t in 2021-22, according to the Foreign Agricultural Service of the US Department of Agriculture (FAS USDA).

Indonesia usually buys most of its corn from Argentina, with Brazil and the US sending smaller volumes (see chart). Receipts from Argentina were already down in 2020-21.

Indonesia could continue to step up purchases of Ukrainian corn because of difficulties with upriver cargo shipments in Argentina, a poor corn crop in Brazil and high corn prices in the US. Ukraine, meanwhile, is reporting a record harvest.

Water levels in the Parana river are still significantly below norm, preventing grain-carrying vessels from operating at capacity. This bottlenecks Argentina's corn exports as ports in south are far from the largest corn-producing regions.

In Brazil, which displaced some of Argentina's corn shipments to Indonesia in 2020-21, corn output has fallen sharply this season, reducing export availability.

And the US — which also displaced some of Argentina's corn shipments to Indonesia last marketing year — is forecast to export 8.32mn t less corn in 2021-22, with USDA projecting exports of 61.6mn t this marketing year in January's edition of the World Agricultural Supply and Demand Estimates (Wasde) report.

In contrast, USDA sees Ukraine exporting 33.5mn t of corn in 2021-22, up by 9.64mn t on the year, as a result of record production of 42mn t, up from 30.3mn t in 2020-21.

Tensions between Russia and Ukraine could pose a risk to Ukraine's corn exports. That said, there is increasing interest in Ukrainian corn on the physical market, with Ukraine's spot contract settling at $284/t fob Odessa yesterday, up by $2/t on the day and $6.50/t on the week, according to Argus assessments.

By Anna Sneidermane

Indonesia corn import origin by marketing year %

Indonesia corn import origin by marketing year, Oct-Nov %