Corn: Locally, adding incremental price premium

January 6, 2018 at 10:07 AM , Starry Night Ltd.
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SOFIA. Will the forecasted global decline in production and lower ending inventory build-up inflationary expectation?

BULGARIA. The most recent USDA report on Grains: World Markets and Trade indicates a decline in world stocks on the background of forecasted lower global production. Such a prospect could actually build-up some inflationary expectations in the price of corn. Anyhow, on the local front, prices have improved (average purchasing prices at 0.135 EUR/kg EXW, according to local authorities) from the lows at the beginning of harvest 2017-18, and although rallies need more market signals to kick in, incremental increases in the price premium are real.

Corn: local market intermediaries gain an additional price premium

Taking advantage of suppressed prices at the beginning of harvest, buyers confidently took on the market, purchasing corn as low as 0.123-0.125 EUR/kg EXW farmers’ warehouses. On the other hand, many farmers, who feared that a bearish trend was just starting to unfold, foreboding worse times in the short-term, quickly sold out, unwillingly assisting buyers to swiftly close out their local buyout campaigns. Filling in their storage facilities, intermediary market players started fulfilling their foreign contracts, and since the beginning of marketing season 2017-18 (1st of September 2017), local market players have kept the export momentum high, with the exception of a few sluggish export weeks.

      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

As a result, by the end of week 51 of 2017, exports to the world reached 644,784 mt, as shipped quantities to EU markets accounted to close to 93%. Only via Varna sea port, by the 24th of December 2017, shipped volumes amounted to 291,964 mt or by 92.4% higher than those of last year at that time, according to the Ministry of Agriculture. On the domestic front, demand is vibrant as by week 51 of 2017, consumption reached 405,000 mt or by 20.54% higher - the increase resulted from a strong demand within the livestock sector. The persistent domestic demand and strong exports have supported prices, leading to minor realized gains for sellers.

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