The stoppage of grain exports out of Ukraine was confirmed on Monday as the country said all ports will be closed until the end of the Russian invasion, though there is a chance that supplies for the next season out of both Ukraine and Russia could also be in jeopardy pending the outcome of the war.
Spring grain planting is right around the corner for both countries, most importantly corn for Ukraine and spring wheat for Russia, and it is unclear whether the ongoing conflict will impact production either physically or economically.
Ukraine accounts for 16% of world corn and 12% of world wheat exports, and top wheat supplier Russia covers 17% of trade. Ukraine still has a good deal of its 2021 corn crop to ship and Russia has yet to plant 30% of its 2022 wheat crop.
Ukraine and the United States are the lone world corn suppliers while Argentina and Brazil's crops are in progress. Although Ukraine's accumulated exports are up sharply from last year's thin season, the shipment stall comes at a bad time since there is still a lot of progress left.
As of last Monday, the country had exported 18.7 million tonnes of corn out of the 33.8 million the agriculture ministry predicts for the 2021-22 season ending June 30. Ukraine announced on Monday its ports would stay closed through the invasion and reported damage to some facilities.
Even if ports were open, international traders would likely hesitate to send vessels to Ukraine. Two commercial ships were hit by Russian missiles on Friday near the Ukrainian port of Odessa.
Ukrainian farmers harvested a record corn crop in 2021-22 of 42 million tonnes, though they had been apprehensive late last year as to whether they could repeat in 2022-23 due to high input costs, but now the conflict may put the physical planting into question.
More than 95% of Ukraine's wheat is winter-sown and most of it is in good condition, but farmers planted notably fewer hectares than originally expected based on the high costs of nitrogen fertilisers and gas as well as dry weather.
Russia's winter crop accounts for about 70% of total output, meaning 30% has yet to be planted, and it is unclear whether recent economic troubles would impact growers' ability to secure inputs or financing. Russia's currency surged to an all-time low on Monday on harsh economic sanctions from the West.
Russia's spring wheat is planted in the Siberian, Ural and Volga districts and is heaviest in May, lasting into June. Spring wheat yields are much lower on average than winter ones and can be more volatile.
An interruption to 2022-23 grain supplies in Ukraine would be easily noticeable as the majority goes to exports and little gets put into storage. Ukraine ships more than two-thirds of its annual wheat harvest and 80% of its corn.
Per US Department of Agriculture data, Ukraine's corn stocks-to-use in 2021-22 is about 3.5% for corn and 6.2% for wheat. That compares with the United States at 33% for wheat, an eight-year low, and 10% for corn, above last year but below the five-year average near 14%.
Russia ships only half of its wheat crop each year and it has more leftover at the end of the season versus Ukraine. USDA shows Russia's 2021-22 stocks-to-use at 14%, close to typical levels.
A severe disruption in spring planting in Ukraine would also have a large impact on the global vegetable oil market as the Black Sea country supplies half of sunflower oil trade. Sunflowerseed plantings in Ukraine last year topped those for corn by at least 1 million hectares. Reuters
Karen Braun is a market and columnist for Reuters. Views expressed above are her own.
