Any disruption to Ukraine’s corn exports “could spell big trouble”, Amis warned, flagging the importance of wheat sales too, even as Russia has cast doubt on the deal which enabled the resumption of shipments.
Amis, the food market monitoring agency backed by the G20 group of nations and hosted by the United Nations, said that August’s resumption of grain exports from Ukraine ports, under a UN-brokered deal, was “not quite yet… the answer to all grain-market prayers”.
While the resumption of shipments through the Black Sea had lifted exports to about 3m tonnes per month, from 1m-2m tonnes per month via barge and railway in the aftermath of Russia’s invasion of Ukraine, this was not enough to meet domestic priorities.
Ukraine – which is poised for its corn harvest, after wrapping up with wheat – “needs to export as much as 7m tonnes per month in order to free sufficient space for the incoming harvests”, Amis said.
The country would also “need to double current levels [of exports] until March” to enable its farmers sufficient income to cover the costs of planting crops to be harvested next year.
‘Could spell big trouble’
Furthermore, for importers, boosting Ukraine’s shipments is important too, given that “the current export volumes coming out of Ukraine may not be enough to bring international grain prices down further, considering that prices are still above last year’s already-elevated levels”, the agency said.
For wheat – of which Ukraine has historically been a competitively priced origin – if exports “remain limited and global prices stay elevated, importing wheat may prove difficult or, at least, financially burdensome, for many countries”.
For corn (maize) “increased exports from Ukraine will be essential”, given that world supplies “are currently spread quite thin”.
This reflects expectations of a fall in world corn output, which Amis forecast dipping by 29.3m tonnes year on year to 1.18bn tonnes, and “higher-than-earlier-anticipated import demand from the European Union”.
With the world numbering only three other major corn shippers – Argentina, Brazil and the US – “any disruption or further reduction in [Ukraine’s] exports could spell big trouble for maize markets”.
The comments come as Vladimir Putin, the Russian president, has provoked doubts over July’s deal which allowed Ukrainian ports to resume grain shipments last month, claiming that it had boosted exports to the European Union, rather than developing countries.
“If we exclude Turkey as an intermediary country, then practically all the grain exported from Ukraine is sent not to the poorest developing countries but to EU countries,” he told a conference in eastern Russia, terming the deal a “scam”.
The speech provoked an initial jump in wheat prices on Wednesday, although Chicago futures for December added only a further 0.3% in early deals on Thursday.
“Wheat prices rose yesterday in Chicago amid the risk of Ukrainian exports being called into question,”Agritel said.
Corn futures for December are down by 0.9% over the two sessions.