Ukraine war throws world corn and wheat supplies in doubt

Source: By Bill Tomson, Agri-Pulse • Posted: Wednesday, March 16, 2022

Global corn and wheat supplies are going to get tighter this year as the invasion of Ukraine threatens to all but halt the country’s ability to plant and harvest corn and wheat in the coming months.

So far, the market has been mostly transfixed on the supplies of old crop corn and wheat in Ukrainian silos that won’t be exported, but now it’s looking like many of the country’s farmers may not be able to get into the fields to harvest wheat and plant corn, and that’s going to put extreme pressure on producing countries like the U.S. and Brazil to fill a significant gap.

Even as the Ukrainians are pummeled by onslaught after onslaught of Russian advances that are tearing apart housing complexes and hospitals, farmers there are strategizing on how to harvest their winter wheat and plant their corn this spring, but it’s unclear if they will be able to.

“Farmers are the same around the world,” National Corn Growers Association President Chris Edgington told Agri-Pulse. “Ukrainian farmers will do their best to put a crop in the ground with whatever they’ve got at the moment. If they can get enough fuel to plant 40% or 50% of their crop, they’ll get it into the ground unless there are tanks and troops on their fields.”

It’s unclear if Ukraine will be able to plant even that much with dire shortages of diesel.

Kees Huizinga, a Dutch native who grows corn and wheat and raises dairy cows in Ukraine, said last week in a video post that he and other farmers ordered hundreds of thousands of liters of fuel before the Russian invasion, but they won’t be getting it because it’s stuck in Belarus.

And fuel already in Ukraine has been appropriated by the military, Ukrainian Agriculture Minister Roman Leshchenko told G7 ag leaders Friday.

Leshchenko asked for fuel during the virtual meeting, according to Ag Secretary Tom Vilsack, who was in the virtual meeting.

The G7 ag leaders later stressed support, but did not specifically promise fuel.

“We strive to provide national, bilateral and international support to help facilitate harvests in Ukraine and ensure the ability of Ukrainian farmers to feed their population and to contribute to global food security,” they said in an official statement “We call on international organizations to support food production in Ukraine during this crisis and ensure food security in affected areas. We remain determined to do what is necessary to prevent and respond to a food crisis, including with humanitarian aid, and stand ready to act as needed to address potential disruptions.”

“Farmers in Ukraine can’t seed,” said Huizinga, who left Ukraine and is now in the Netherlands.

The UN Food and Agriculture Organization estimated Friday that 20% to 30% of Ukraine’s winter wheat, corn and sunflower crops may not be planted or else go unharvested this year, and yields of remaining crops may be reduced.

Ukrainian corn production has been rising steadily for the past decade. It rose again last year to about 42 million metric tons and the country was expected to export more than about 28 million tons for the current 2021-22 marketing year, according to a USDA forecast completed in March that did not take into account the war.

That represents about 14% of world corn exports, says USDA Chief Economist Seth Meyer.

But nearly half of those exports – between 13 and 14 million tons – was still in storage when Russia invaded and overseas shipments stopped, according to Andrey Sizov, a Russian Black Sea grain analyst and author of The Sizov Report.

Those un-exported stocks are creating a tightening in the market, but if Ukrainians don’t plant this spring, the market will get a lot tighter and countries that count on that grain will be looking elsewhere.

Countries in Southeast Asia and the European Union are the largest buyers of Ukrainian corn, but nations in the Middle East, Africa and the Eurasian Economic Union are dependent on getting the grain they need from Ukraine.

Likewise, Ukraine’s winter wheat is nearing harvest time. In the absence of a war that has closed off farmers from getting inputs and fuel, USDA was forecasting Ukraine would produce about 33 million tons of winter wheat this year. Now the harvest is in jeopardy.

National Association of Wheat Growers CEO Chandler Goule tells Agri-Pulsehe’s not worried about the world supply of wheat this year, “but if this conflict continues for a year or two and if we have a drought like we did last year … then I think you could be looking at issues with world stocks.”

Vilsack, in a closed meeting with U.S. ag groups last week during the Commodity Classic, told leaders that Yemen and Tunisia are two nations that may suffer without grain supplies from Ukraine, according to sources.

Under normal circumstances, Ukraine would begin its wheat harvest in late June or early July. Farmers there would begin planting corn in late March or early April.

“This is the stuff we will have to focus on when it comes to the ability to crop for themselves or for trade,” Meyer said.

The U.S. will do what it can to make up the difference after the next corn harvest, said Edgington, but it will be difficult.

“We need mother nature to give us a good year both in North and South America because food insecurity is going to be a challenge,” Edgington said.

As to how much corn Ukrainian farmers will be able to plant – they sowed about 10 million acres last year – and whether or not Ukraine will be in any position to export the harvest, the USDA is not speculating.

Right now, USDA’s economists are dealing with the fate of old crop corn and wheat, says Meyer. The next step will be monitoring the fates of the new crops.

And when it comes to whether or not the U.S. will be able to step in with corn exports to make up for the gap left by Ukraine, Edgington says it will be tricky.

“The U.S. will obviously do what it can, but we have a long list of consistent customers that are buying products from the U.S. on a regular basis,” he said. “There will be some interesting logistics. We’ll go down to a carryout number that some people won’t be comfortable with.”

For more news, go to www.Agri-Pulse.com.

|