China Resumes Massive Corn Imports From Ukraine
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In 2021, the total land sown in spring amounted to 17 million hectares of crops in Ukraine. These pre-war sowings resulted in decent crops in 2022 despite the difficult conditions and loss of land. In contrast, in 2022, around 4 million hectares remained unplanted due to two main factors:
• Losses of the cultivable area due to the occupied territories or the fact that some land is too damaged by hostilities to be cultivated or too dangerous
• Poor profitability for producers: the efforts to facilitate the transportation of exports have resulted in higher costs. Exports by truck, rail, or barge from the west are expensive, while long inspection times and associated demurrage charges have added high costs to shipments through Black Sea ports. Ukrainian producers have largely absorbed these costs in the form of lower prices. Furthermore, input prices have risen, reducing producers’ profit margins and discouraging them from planting for the coming year.
As a result, Ukraine’s Grain harvest could decline by 35-40 million tons in 2023, including 12-15 million tons of Wheat and 15-17 million tons of Corn, according to the Ukrainian Agribusiness Club. In the future, Wheat supplies for 2023/24 (composed of the year production and the stocks from the 2022/23 marketing year) will likely be almost 30% below 2022/23 levels and 45% below 2021/22 level. Concerning Corn, the expected supplies for Ukraine for 2023/24 could be 36% below the 2022/23 level and 53% below the 2021/22 level.
During the summer of 2022, the Ukrainian storage abilities were questioned, as the Grain was accumulating and could not be delivered abroad. This issue has strongly decreased since the Black Sea Grain Initiative: actually, the high Grain stocks allowed export estimates to grow while production dropped. Before the invasion, Ukraine exported nearly 80% of its Corn crop annually, preventing large year-end stocks. The Russian blockade has forced Ukraine to stockpile: the USDA’s estimate for the 2022-23 Corn-ending stocks in Ukraine amounts to 6,9 million tons, up from 5,1 million the previous year. This is well above the norm, which averages 1,3 million tons. In addition, the stock-to-use for the year is estimated at 27%, compared to 4% before the war.
Concerning the impact of the Ukrainian products on Eastern European markets, the recently proposed aid package by the Commission may alleviate the pressure on local farmers. However, the difficulties encountered will remain in these countries, as they are symptomatic of a lack of infrastructure investment. It will therefore be crucial for them to be able to invest more in their storage capacities and in the performance of their supply lines on top of the already existing challenge of those countries to develop new outlets for their cereals in their own country, notably based on bio and circular economy.
Ukrainian Corn Export
As per AgFlow data, Ukraine exported 8 million tons of Corn in Q1 2023. China led with the import of 1.1 million tons in the last month, followed by Spain (0.5 million tons), Egypt (0.3 million tons), and Italy (0.2 million tons). According to the UNCTAD secretariat, based on data from the Joint Coordination Centre as of 5 March 2023, 51% of the total Corn was exported to high-income countries, followed by upper-middle-income countries (40%) and lower-middle-income countries (9%).
The mechanisms set by the European Union and the United Nations have served their purpose in allowing the export of more than 54 million tons of Ukrainian Grain. However, the future of the Black Sea Grain Initiative – which has resulted in the export of 25 million tons since August – is conditional on the goodwill of Russia, determined to use it as leverage to negotiate an easing of Western sanctions toward it.
Other sources: FARM
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