KYIV: Soaring global gas prices and a subsequent rise in domestic prices has increased the net cost of Ukrainian corn, restraining the pace of the 2021 harvest and forcing farmers to reduce next year's area under corn, analysts and traders said on Friday.
Grain silos operators say gas prices have tripled since the start of the season and the cost for lowering grain humidity by 10% has reached up to $40 a tonne.
Corn after harvesting must be dried for its subsequent long-term storage in silos.
"It can be argued that high gas prices have delayed the harvest as farmers waited for fields to dry out, because every 1% of natural grain drying means savings of $4-$6 a tonne," one Ukrainian trader said.
Ukraine had threshed about 44% of its corn area as of Nov. 1, amounting to 15.6 million tonnes, compared with 70% of the sown area at the same point last year.
Limited grain supply combined with increased logistic costs have led to a $8-$10 rise in local corn prices, traders noted.
They said the cost of using grain carriages has quadrupled over the past month, adding between $15 and $25 a tonne to the cost of grain delivery to ports. Prices now range from $40 to $55 a tonne depending on the port.
Traders say corn export prices remain stable and the additional costs are borne by farmers, reducing corn profitability and forcing growers to consider cutting acreage next year.
"The corn sowing area is expected to decrease by 10% to 15% next year, also because of higher prices for nitrogen fertilisers," one foreign trader said, adding that the cost of growing 1 hectare of corn will increase by $200-$300.
He said the alternative for farmers will be soybean or sunflower crops. Ukraine is expected to harvest a record corn crop of more than 37 million tonnes this year, with exports reaching 31-32 million tonnes. Corn exports had reached 2.4 million tonnes as of Nov. 1.