Ukraine: Export Vessel Numbers and Grain Volumes Dropping Big
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According to Ukrainian Ag Ministry’s information, spring planting is underway. Areas planted as of June 8, 2023, are approximate: – Wheat – 271,000 ha, Barley – 808,600 ha, and Corn – 3,999,600 ha. It should be noted that the new Post area estimate for Corn (4.2 million ha) is significantly higher than the Post April 2023 estimate (3.3 million ha). According to industry, the optimism for Corn production was predominantly fueled by a drop in prices for natural gas and, subsequently, the availability of cheaper nitrogen fertilizers on the market.
The willingness of Ukrainian farmers to invest in Corn was slightly unexpected to Post, especially considering the current issues with agricultural logistics for Ukraine. Post’s Barley area forecast increased somewhat as well based on planted area reports by Ag Ministry compared to the April 2023 estimate. MY2023/24 yields for predominantly winter crops (Wheat and rye) are based on a good head start from March to mid-May 2023. Their yields have been increased against Post’s April 2023 estimates.
Yields of spring crops (Corn and over 60 percent of Barley) will be impacted by growth conditions shaped by soil moisture availability. Subsurface soil moisture suggests a growing deficit for significant parts of Ukraine. Based on this information, Post decreased the MY2023/24 Corn yield forecast compared to its previous estimate. The MY2023/24 Barley yield forecast is unchanged, as higher yields for winter Barley might be offset by lower yields for spring.
Based on the abovementioned assumptions, Post updated its MY2023/24 production forecast:
– Wheat – 16.5 MMT
– Barley – 5.1 MMT
– Corn – 24.8 MMT
– Rye – 250,000 MT
Grain Exports of Ukraine
The Ag Ministry reported the following export numbers for the local MY2022/23 (starts July 2022 for all crops) as of June 7, 2023:
– Wheat – 15,704,000 MT
– Barley – 2,655,000 MT
– Corn – 27,313,000 MT (or 21,925,000 MT since October 2022)
Based on the abovementioned numbers, Post could assume that Barley and rye exports have been depleted for MY2022/23, while there is additional export potential for Wheat and Corn. Logistics remains the core issue for shipping Grains out of the country. Due to Russia’s obstruction of the BSGI, the number of vessels and export volumes for major Grains have been sliding for the third month since March 2023. Most importantly, lower farm-gate prices for Ukrainian farmers make them less sustainable in the long-term perspective.
Import bans from neighboring EU Member States, initiated by Poland, are another issue impacting MY2022/23 exports from Ukraine to the EU via Solidarity Lanes. The situation culminated with introduction of exceptional and temporary preventive measures on limited Ukrainian imports by the EU until September 15, 2023.
According to AgFlow data, Spain imported 0.34 million tons of Wheat from Ukraine in May 2023, followed by Turkey (0.33 million tons), Egypt (0.21 million tons), and Syria (0.12 million tons). Total exports reached 6.6 million tons in Jan-May of this year. The average export volumes to all neighboring countries (Romania, Poland, Hungary, Moldova, Slovakia) were around three MMT, dropping to about 2.6 MMT in April 2023 and a subsequent rebound back to the average rate in May 2023.
Under the current circumstances, Post does not reasonably expect significant export bottlenecks for Ukrainian Grain exports to the EU for MY2023/24. At the same time, the BSGI’s (dis)functionality remains the primary factor for slowing Grain exports out of the country for MY2023/24, with agricultural export capacity (both Grains and oilseeds) varying between three and six MMT (the former is for BSGI closed, and the latter is the BSGI operating at maximum historical capacity).
Other sources: USDA
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