– Hello, hello, tell me, please, how much does it cost to dry a ton of corn?
– What is your company? How much corn do you have?
– I am the son of a farmer, looking for counterparties for my father.
– We give a discount from 1000 tons. We can send the price by e-mail to you, there you will see all the prices. You can bring less, but then the price will not be less.
This is roughly how the conversation between the “son of a farmer”, a journalist from Latifundist.com, and one of the Ukrainian enterprises looked like. We decided to do a little research on the market situation. After all, this season also has its own peculiarities – a sharp and significant rise in gas prices, an increase in prices for services. And the rains slow down the harvesting campaign, increasing the moisture content of the grain. The moisture content of corn is in the range of 20-35%, on a basis of 14%. Also, among the difficulties of the current corn season is the protracted harvest, which coincided with the harvesting of soybeans and sunflowers. This puts additional pressure on the market and puts a special strain on grain logistics. And the wave of COVID-19 is slowly slowing down economic activity.
Agent provocateur, or current gas prices
We can talk a lot and for a long time about the rise in gas prices and its reasons, but today we will not dwell on this. Let’s just look at the graph for the last six months.
According to ExPro Consulting, Ukraine in January-October 2021. imported 2.5 billion cubic meters of natural gas, which is 6 times less than last year’s volumes. Such a sharp decline in imports is associated with high prices.
Of course, such gas prices pulled behind them the prices for grain drying.
Corn drying tariffs
In the market, we were told that if 2-3 thousand tons of corn are dried, some enterprises can give a discount of UAH 10 per ton. This is the first factor – large clients. That is, when signing a contract for the supply of 5 thousand tons of corn for drying, we can already talk about a discount. The second point is that everyone wants to fix the volume in raw corn.
The situation is similar with discounts on shipping rates. But all discounts are calculated after the fact, not over the phone. Only after the client has delivered the promised grain in full, the elevator considers the cost of services at a discount.
It is worth noting that the prices for accepting grain at elevators also vary, somewhere it is free, while for others it is 20-25 UAH / t. As for the prices for drying corn on the market, the range is now impressive. From 48 UAH / t-% to 180 UAH / t-%. You, most likely, know this yourself, but you can also look at the screenshots of the elevator prices below. According to Kirill Bondarenko, it’s all about the free gas market. Someone managed to buy earlier and upload it to their storages, someone contracted in May at a good price, and someone missed it, did not have time and now is forced to raise the price.
|Elevator||Region||Cost of drying corn, VAT included|
|OLAM Belotserkovsky elevator||Kiev region||103 UAH / t-%|
|“Volitsa-Agro”||Kiev region||83 UAH/ t-%|
|Alebor Group||Cherkasy, Vinnytsia, Odessa regions||135 UAH/t-%|
|Varvarovskiy elevator G.R. Agro||Dnipropetrovsk region||180 UAH/t-%|
|Elevator “UIFK-AGRO”||Kiev region||96 UAH/t-%|
|Elevator “Zerno Agro” (KADORR Agro Group)||Dnipropetrovsk region||160,8 UAH/t-%|
|“Elevator Agro” (“Agrain”)||Chernihiv region||109,98 UAH/t-%|
“Despite the increase in tariffs for drying at elevators in Ukraine, most of the grain goes to the elevators, since unloading in ports is slow and not all terminals provide cleaning and drying services,” analysts at G.R. Agro.
As reported by Elevatorist.com at the “Belozavodsky Elevator”, the tariffs were left unchanged.
Also, as Elevatorist.com writes, Agroprosperis Group of Companies carried out a sparing tariff increase, increasing it by 20%. Given that the cost of gas in November increased by another 35% against the October price. The company says that gas is the key, but not the only component of the cost of the service, so they are trying to compensate for the increase in its cost.
Corn harvest 2021
According to the USDA report for November, analysts raised the forecast for world corn production in 2021/22 MY to 1,204.62 million tons, which is 6.4 million tons more than the previous forecast.
According to the report, world corn exports in 2021/22 MY are estimated at 203.47 million tons, which is 1.56 million tons more than the previous estimate for October. The forecast of ending stocks was also increased from 301.74 million tons by 2.68 million tons to 304.42 million tons.
At the same time, USDA experts left the forecast for the corn harvest for Ukraine in 2021/22 MY at the level of the forecast for October – 38 million tons. In addition, grain exports, according to analysts’ forecasts, will not change and will amount to 31.5 million tons, and ending stocks will remain at the level of 0.91 million tons.
Agritel analysts estimate the corn harvest in Ukraine at 38.2 million tons.
According to the joint project Harvest Online 2021, JIVA NPK and Latifundist.com, as of November 4, 2021, Ukrainian farmers threshed 22.8 million tons of corn from 3.3 million hectares or 61% of the area (5.47 million ha according to the forecast in 2021). The average corn yield since the beginning of the harvesting campaign in Ukraine is 6.8 t / ha.
The full version of the article is published on the website Latifundist.com