Ukrainian Grain Output to Shrink by 50%


Jan 13, 2023 | Agricultural Markets News

Reading time: 2 minutes

Ukrainian Wheat | The NASA Harvest team calculated that Ukrainian farmers harvested 26.6 million tons of Wheat in 2022, several million tons higher than expected in leading forecasts. “That’s down from the previous year’s record harvest of 33 million tons, but it’s close to the five-year average of 27.9 million tons,” Becker-Reshef, Director of the NASA Harvest program, said. However, due to the war, Ukraine does not have access to 22 percent of that Wheat in the eastern part of the country.

Due to the occupation of territories and expensive logistics, farmers were forced to reduce the sown area where less profitable crops were grown. Farmers generally reduced the sown area from 25 million to 16 million hectares. There was a significant decrease in the area under Wheat because it has low profitability.

President of the Ukrainian Grain Association, Mykola Gorbachev, notes that according to our estimates, the sown area will be reduced by about 40% in 2023. Therefore, the production volume will be reduced by half compared to the pre-war years. For example, earlier farmers grew 106 million tons of Grain and oil crops, and our forecast for next year is about 53 million tons.

It was previously reported that ships in Turkish ports were inspected for a long time. Vessels are examined by a commission of an equal number of inspectors from four parties — Turkey, Ukraine, the UN, and Russia. To check more ships, it is necessary to increase the number of these commissions. The UN agreed to increase its number, but Russia is blocking this issue.

This means that there are now almost 100 ships waiting to be loaded with Grain. The idleness of one vessel costs $20-30 thousand per day, and they stay there for 2-3 days. Sometimes they stand for a month, and no one compensates for these costs. Farmers do not receive money from exports because such logistics eat up everything. According to AgFlow data, Ukraine shipped 0.5 million tons of Wheat to Turkey in December 2022, followed by Spain (0.4 million tons), Indonesia (0.17 million tons), and Egypt (0.1 million tons). 

The President added that most foreign producers do not know that our farmers are working at zero or in the red. It is not profitable to grow Wheat and corn, so that we will reduce the area. It has come to the point that farmers are beginning to reduce the area under a sunflower. If we previously grew 16 million tons of sunflower, then the forecast for next year is 10 million tons. Areas under all crops are shrinking, mostly under the least profitable ones, namely Wheat, corn and barley. Therefore, we see a trend where farmers primarily grow good crops and export them by alternative routes.

Ukrainian Grain Output to Shrink by 50%

Ukrainian Wheat: Storage

The USDA forecasts Venezuelan Wheat imports to be 1.2 million tons in MY 2022/23, a 10 percent increase from MY 2021/22. Imports are expected to increase due to an expected economic recovery and the improvement of the purchasing power of the industry through the strengthened opportunity to access financing credit. In MY 2021/22, imports were estimated at 1.1 million tons.

Venezuela continues importing Mexican durum, although it is not preferred due to the quality and milling yield issues. Venezuela will have limited capabilities to import Wheat from the United States, which is favored by the industry due to higher quality and better milling yields, due to high prices, and will shift over to other suppliers. As a new development, Venezuela imports increasing quantities of Wheat from Brazil. Brazil’s Wheat production increased in MY 2021/22. The Wheat exports from Brazil could start to compete with the U.S. Hard Red Winter in MY 2021/22 and MY 2022/23 if Brazil can compete on price. However, Venezuela is accustomed to US Wheat’s high quality and milling yields.

Venezuelan Wheat imports from Russia and Ukraine have been declining since CY 2019. In MY 2020/21 and MY 2021/22, there were no Wheat imports from Russia, and only small quantities of flour were imported from Ukraine. In MY 2020/21, Turkey led the country’s Wheat import, followed by the United States, Canada, Mexico, and Brazil. According to AgFlow data, the United States led the Venezuelan Wheat import market with 0.2 million tons in Jan-Oct 2022, followed by Canada (0.18 million tons), Russia (0.08 million tons), and Brazil (0.01 million tons).

Other sources – Ukrainia Wheat: UGA

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