Black Sea grain exports beating early market ideas by substantial degree

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By Karen Braun

NAPERVILLE, Illinois- Ukraine, particularly in the last few months, has been exporting much more grain than anyone expected despite more than two years of war with neighboring Russia.

This, combined with two bumper Russian wheat crops, has led to an enormous surplus of Black Sea grain shipments over the last two seasons compared with what was initially predicted, a surplus that could easily replace entire export programs of other top suppliers.

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Ukraine’s recent success has been limiting for traditional grain exporters like the United States, despite a boost in US supplies versus last year.

The US Department of Agriculture on Friday raised Ukraine’s 2023-24 wheat exports for a fifth consecutive month and corn exports rose for a second straight month. Based on the estimate history, the expanding export pegs are linked with better-than-expected shipment performance and not bigger crops.

Ukraine has been successfully operating its own Black Sea shipment corridor since August after Russia quit the original initiative in July, despite a significant number of Russian attacks on Ukrainian port infrastructure since then. Kyiv reported record February export volumes for all goods.

USDA’s combined 2023-24 export estimates for Ukraine corn and wheat have risen 35 percent (10.5 million metric tons) since August, though production is up just 9 percent (4.4 million tons). This is based on a return to near-normal export volumes versus output, suggesting Ukraine’s export system has somewhat re-regulated.

Ukraine produces significantly more grain that it uses domestically, so much of it goes to exports, which is a huge moneymaker for the country. In the five marketing years prior to the war, Ukraine exported an average of 79 percent of its annual corn crop and 67 percent of wheat.

Those shares fell far below normal in 2021-22, the first year of war disruption, then they surged well above typical levels in 2022-23 as shipments thrived but crops were much smaller. USDA’s 2023-24 corn and wheat estimates suggest respective export-to-output ratios of 83 percent and 68 percent , though they had been pegged as low as 68 percent and 49 percent within the last few months.

Russia is set to export a post-Soviet era record 56 percent of its 2023-24 wheat crop, up from the five-year average of 48 percent . The United States is seen exporting just 39 percent of its wheat crop this year versus an average of 50 percent , reflecting its recent loss in global market share.

Across the recent two marketing years, major Black Sea grain exports are set to outperform original estimates by a combined 53 million tons (2.025 billion bushels). These days, that amounts to more than 2.5 years’ worth of wheat exports out of the United States, former top wheat supplier.

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