NAPERVILLE, Illinois – Ukraine has shipped significantly more grain over the last several months than originally expected, especially corn, easing worries that were prominent last year over the country’s export program.
But Russia now claims it will not support the Black Sea grain deal beyond May 18 due to obstacles on its own food and fertilizer exports. That deal was signed last July to allow shipments from Ukrainian seaports, overseen jointly by Russia, Ukraine, Turkey and the United Nations.
Traders seem more focused on the grain deal’s recent success than the risk to Ukrainian exports should Russia cease to cooperate. Chicago wheat futures on Tuesday hit their lowest levels since July 2021, and Euronext wheat sits at 19-month lows this week.
That sentiment is not necessarily unreasonable given how poor initial expectations were.
For example, the US Department of Agriculture currently forecasts 2022-23 Ukrainian wheat and corn exports at 14.5 million and 25.5 million tons, up from a respective 10 million and 9 million predicted last July just before the deal’s launch.
That compares with December predictions of wheat at 12.5 million tons and corn at 17.5 million.
The export deficit versus year-ago is becoming much less alarming. As of Monday, Ukraine’s 2022-23 grain exports were down about 11 percent from the same date last year compared with margins of 18 percent in late March and 27 percent in late February.
The severe limitation of exports at this time last year is not the only explanation for the narrowing deficit. Export numbers published by Ukraine’s ministry suggest both wheat and corn exports in the last couple of months have been above recent years’ averages.
But that could change in the 2023-24 season, beginning July 1, as Ukrainian grain crops are expected to shrink from last year on smaller planted area. Oilseeds are seen benefitting from lighter grain plantings.
A look at Ukraine’s corn balance sheet reveals the critical role of leftover stocks from the prior harvest in the country’s export potential this season. According to USDA data, Ukrainian corn exports in 2022-23 will represent 94 percent of the year’s corn harvest. – Reuters
