Ukraine cannot export
Grain trade across the Black Sea virtually shut down
03/16/2022, 11:01 am
The war in Ukraine is causing supply bottlenecks worldwide. The trade in grain across the Black Sea has come to an almost complete standstill. The Russian invasion also has serious consequences for Ukraine’s agriculture.
According to the largest German agricultural trader Baywa, the wheat exports from Ukraine and Russia via the Black Sea, which are important for world nutrition, have largely come to a standstill. “Nothing is currently being exported from Ukraine’s ports, nothing is leaving the country,” said Jörg-Simon Immerz, head of grain trading at the Munich-based company. “On the Russian side there is export activity, but very limited.” The Black Sea market with wheat from Russia and Ukraine covers around 30 percent of global demand.
Reports of an imminent ban on exports of Russian grain had recently caused a stir. According to Baywa, the direct effects of the Russian invasion on agriculture in Ukraine are more serious.
“Market looks much more towards Ukraine”
Immerz said of the Russian restrictions: “In the end, it’s probably just a matter of stopping exports to neighboring countries in the Eurasian region, which play a comparatively small role in this regard.” In principle, export licenses would have to be signed in Russia within specified quotas. “As it appears, exports can still be made within this system. The concrete effects on the market are therefore manageable.”
Russia is one of the main producers of wheat and relevant for supplying the world. “It’s the same with Ukraine, in a very similar league,” said Immerz. “Russia produces about 80 million tons of wheat a year and exports about 30 million tons of it. Ukraine exports about 20 to 25 million tons a year.” These export quantities are particularly relevant for trade. “That’s why the entire market is looking much more closely at Ukraine than at Russia.”
Wheat shortage in the EU unlikely
The experts are wondering whether and how agriculture in Ukraine will be possible this year under war conditions. “In Ukraine, production is much more at risk,” said the Baywa manager. “The wheat was sown in the fall and should now be fertilized. The corn hasn’t even been sown yet and if it can’t be sown, there will of course be no harvest.”
Because of the war, grain prices have already risen worldwide in recent weeks. According to Baywa, there is no reason to fear that wheat will become a scarce commodity in the EU, since much more wheat is harvested in the EU than is consumed. “The EU exports around 30 million tons of wheat every year, and Germany is also an exporter in normal years,” said Immerz. However, this does not apply to all types of grain. “We depend on imports for corn.”