By Ukraine’s grain exports have surged during the 2024-25 marketing year (July-June), despite ongoing Russian strikes on Black Sea ports.
As of October 21, Ukraine exported a total of 13 million tons of grain in this period, compared to 8.3 million tons on the same date last year, according to data from the agricultural ministry.
The total included 7.2 million tons of wheat, 3.8 million tons of corn, and 1.7 million tons of barley.
Although exports have increased significantly in recent months, Ukraine continues to face challenges from dry weather, which has led to crop failures and repeated Russian attacks on its ports.
UK warns Russia strikes could delay supplies
UK Prime Minister Keir Starmer stated on Tuesday that Russian strikes on Black Sea ports in Ukraine are delaying grain shipments to the Global South.
In early October, Russian drones targeted at least four cargo ships, including one reportedly carrying 6,000 tons of corn, as reported by the BBC.
“Russia’s indiscriminate strikes on ports in the Black Sea underscore that (Russian President Vladimir) Putin is willing to gamble with global food security in his attempts to force Ukraine into submission,” Starmer said in a statement.
Before Russia’s invasion in 2022, Ukraine was a major global producer of corn and wheat, exporting approximately 6 million tons of grain each month via the Black Sea. Despite the ongoing conflict, grain exports remain a vital source of revenue for Ukraine.
Dry weather affects Ukraine’s production
Dry weather in Ukraine has negatively impacted the harvesting of key grains, leading to an expected decline in production for 2024-25.
The country is projected to produce about 25 million tons of corn, down 7.5 million tons from last year. Wheat production is also expected to decrease by 600,000 tons, totaling 22.4 million tons in 2024-25.
As a result, exports are forecasted to decline: wheat exports are expected to drop by 16% to 15.6 million tons, and corn exports are projected to fall by 25.4% to 22 million tons, according to S&P Global Commodity Insights data.
To maintain an adequate supply, the Ukrainian government has imposed a limit on wheat exports, capping them at 16.2 million tons for the 2024-25 marketing year.
Dynamic demand and robust exports
Despite the Russian strikes, Ukrainian exports have remained strong. Spain has emerged as the top destination for Ukrainian wheat, importing 1.6 million tons this season.
According to a S&P Global report, Indonesia follows with 944,000 tons, and Vietnam imports 478,000 tons. Egypt, Algeria, and Bangladesh are also active in sourcing wheat from either Russia or Ukraine.
Additionally, Russia recently announced that it would sell wheat directly to state buyers without intermediaries, which may increase demand for Ukrainian wheat in the global market.
Meanwhile, Spain is again expected to be the leading importer of Ukrainian corn as the marketing season (October-September) gets underway.
Ukrainian corn may lose out to the US and Brazil
European nations, including Spain, Portugal, Italy, and the Netherlands, have shown interest in Ukrainian corn, according to reports. S&P Global noted that competitive buying interest has emerged from these countries, as maritime trade is more cost-effective than rail transport from Eastern EU countries.
However, higher prices have slightly diminished the competitiveness of Ukrainian corn in the European Union market compared to Brazil and the US.
Other significant destinations for Ukrainian corn include China, but Ukraine is losing ground to Brazil and the US due to limited supply and China’s decision to reduce corn imports to bolster domestic prices and production.
Turkey emerges as a key destination for Ukrainian corn
Buying interest in Turkey has reached $239 per ton during the second week of October for a one-month delivery contract, according to S&P Global.
In Turkey, buying interest has reached $239 per ton for one-month delivery contracts during the second week of October, according to S&P Global.
The Turkish government recently reduced the import duty on corn to 5% from a staggering 130% for up to 1 million tons until the end of 2024, prompting buyers to seek spot deliveries.
However, this reduction has led to a drop in domestic prices, making Turkish corn more competitive and subsequently reducing demand for Ukrainian corn, as reported by S&P Global.
In comparison, during the first week of October, the CIF (Certificado de Identificación Fiscal) offers for one-month forward corn deliveries to Spain’s Mediterranean region were $250 per ton, with buying interest in the mid-$230 range.
As of October 21, the offers dropped to $243 per ton, with bids heard in the low $230s from the buying side, according to S&P Global.
The post Analysis: How Ukraine’s grain exports thrive despite Russian strikes on Black Sea appeared first on Invezz
