Up to 50% less than before the war, Ukraine’s grain harvest is likely to fall this year as Russia’s continued incursion into the country causes a global shift in grain trade.
Both Ukraine and Russia were among the world’s top producers of commodities such as wheat and barley before war broke out in February 2022. However, the conflict has seen the price of US wheat and corn hit decade highs and triggered volatility in world wheat prices throughout the year. Prices stabilized in 2023, down about 13% year-to-date.
And while last year’s yield and exports of grains such as wheat from Ukraine were still significant despite the war and the closure of Black Sea ports, the amounts harvested and shipped this year are likely to decline.
The Black Sea Grain Initiative, an agreement to safely route ships from Ukrainian ports through Turkey, was extended by only 60 days in March, far less than the previous 120-day period.
Last year’s wheat crop looks to be “pretty good” in Ukraine and “absolutely fantastic” in Russia, according to CNBC sources, but Ukraine’s harvest is likely to be down about 20% in 2023 because farmers have sown less crops.
This is due to a lack of access to financing, fertilizers, fuel, labor, but also the fact that the price of grain in Ukraine is really low, as reported by CNBC.
Ukraine’s losses will have to be covered elsewhere over time, including by Russia itself, but with a greater focus on the US, Canada, Brazil and Argentina.
Source: Money Review