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While grain producers may suddenly consider this year to be an extremely financially successful year, some Serbian exporters are already lost due to record price increases on world stock exchanges.
As we learned, the health crisis brought more surprises to corn exporters. According to information from the association “Zita Srbije”, they will be the ones who will have the most damage due to the so-called futures contracts that concluded a few months ago, when not even the most influential analysts could expect such movements in the market.
In the latest report, the commodity exchange in Novi Sad saw a record increase in the price of corn this season. The contracts were concluded in the range of 18.5 to 19.4 dinars per kilogram without VAT. Compared to the previous week, corn was 9.55 percent more expensive, while compared to the same week in 2019, the price was 36 percent higher.
Earlier this year, when no one could predict the economic consequences of kovida 19, the Ministry of Agriculture published a price forecast for the ten most important agricultural products in Serbia. The estimated average price of corn at the time was 16.45 dinars per kilogram (plus minus 10 percent), so it is clear how much analysts’ expectations were exceeded and how much uncertainty the pandemic brought to the market.
– Regarding wheat, the situation is quite clear. There were not many forward contracts, very few, and that was done. The problem arose with corn, because we have many forward contracts at low prices – says Vukosav Saković, director of the association “Zita Srbije” for “Politika”.
These exporters, he explains, sold the cereals in advance and agreed on the price with the delivery time in the specified period.
– If you agreed in May that you would deliver 1,000 tons of corn to a foreign buyer in October for 120 euros, that is a contract that is subject to international law. No one will be able to avoid fines there, although some now, when prices are drastically higher, refuse to deliver the goods – says our interlocutor.
This situation, he adds, generates certain problems, especially for those companies that respect contracts. He says that “all this is a trade that carries certain risks due to erroneous estimates” and wonders what would have happened if the situation had been reversed and that corn had fallen to 100 euros per ton at this time.
Sakovic believes that, unfortunately, for this, surely there will be “many lawsuits, certain fractures, deficiencies and losses”.
According to him, the largest corn exporters in the Black Sea region are the Ukrainians, who export about 30 million tons, the Romanians, between five and six million, while Serbia exports three million tons of this grain.
Although the crisis due to the pandemic and the accumulation of surpluses, which affected price growth, is evident, he points out that this situation in the corn market was mainly sponsored by Romanians. They allegedly tried to suspend the delivery of corn at the expense of the drought in part of their territory. As he says, of course, no one admits it, and it will be discussed in the international organization of grain traders.
– Currently Romania does not supply corn, it has created a shortage in the market. Large buyers rushed to buy us, the price rose and sellers are reluctant to sell it and that is now a problem – emphasizes the director of the association “Zita Srbije”.
In SIDEV’s analysis of January this year, Serbia has significantly increased maize production in the last 15 years, and in 2018 it was the 16th world exporter. Analysts affirm that the global crisis in the price of agricultural products began fundamentally with corn, so that the great demand for this product was merged by high oil prices, which generated the demand for ethanol, with several consecutive years worst production. The average price of corn in 2019 was 128 euros per ton, and the last five of 134 euros per ton.
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