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Wheat and Corn markets - what’s changed since the war?

A post by agflow.com


Ukraine’s Corn Exports Remain Significant Despite the War


Ukraine is a world-leading exporter of Corn, ranking as the second-largest exporter at the beginning of 2023. Despite a YoY increase of 12 Mmt in Corn production in the MY 2021/2022, exports decreased by 2.6 Mmt YoY to 22.7 Mmt, mainly due to the disruption caused by the Russian war in Ukraine on the global supply chain. At the beginning of the MY 2022/2023, Ukraine’s Corn exports decreased to 12.5 Mmt between Oct 2022 and Feb 2023, 5.9 Mmt lower YoY. Despite the war, Ukrainian exports remained at a significant level, albeit lower YoY, thanks to the Black Sea Grain deal. Which were the most affected Ukraine Corn destinations by the war?



Brazil Overtakes Ukraine in Spanish and Chinese Corn Markets


In the MY 2021/2022, China was the leading destination for Ukraine’s Corn with 6.2 Mmt, followed by Spain with 3 Mmt and Turkey with 2.4 Mmt. However, between Oct 2022 and Feb 2023, Ukraine's exports to China decreased by 1.5 Mmt, while Turkey's imports from Ukraine increased by 0.34 Mmt YoY to 1.7 Mmt, making it the second top destination. Conversely, Spain decreased its imports from Ukraine by 0.73 Mmt YoY and ranked as the third destination between Oct 2022 and Feb 2023. During the same period, China and Spain increased their imports from Brazil by 2.1 Mmt and 0.5 Mmt YoY, respectively. As Brazil is becoming more competitive at the beginning of the MY 2022/2023, it raises the question of how Brazil's Corn prices compare to Ukraine's in the same period.



In a Nutshell


Ukraine is a world-leading producer and exporter of Corn despite the challenges posed by the war with Russia. While Ukraine's Corn production was estimated to decrease due to the war, the USDA has revised its estimates upwards, thanks to increased yields. Despite lower exports in the MY 2021/2022, Ukraine has remained a significant player in the global Corn market, with China being the leading destination.


Brazilian Corn prices were higher than Ukrainian Corn at the beginning of the MY 2022/2023. However, despite the lower FOB prices, Ukrainian Corn exports have faced obstacles due to the war, resulting in lower exports than Brazil, which overtook Ukraine on the Spanish and Chinese markets.


On March 18th, 2023, the Black Sea new deal was extended for 120 days. This extension will enable Ukraine to continue exporting its agricultural commodities. However, uncertainties persist due to the ongoing war.


One Year Later: War Effects on Ukraine Wheat Exports


Since February 2022, the war has affected Ukrainian Wheat exports, but early 2023 saw decreased prices and higher exports YoY..


Ukraine Wheat Exports Are 0.5 Mmt higher YoY in Jan 2023


Ukrainian Wheat exports reached 21.4 Mmt in MY 2021/2022, increasing by 4 Mmt YoY. However, 20.8 Mmt of these exports occurred between Jul 2021 and Feb 2022. Since the war started in late Feb 2022, exports only reached 0.6 Mmt between Mar and Jun 2022, a 2.5 Mmt decrease YoY. The Russian war in Ukraine caused exports to stop partially for the rest of MY 2021/2022. However, at the beginning of MY 2022/2023, thanks to the grain corridor agreement in late Jul 2022, Wheat exports reached 10 Mmt between Jul 2022 and Jan 2023, with a 1.8 Mmt decrease YoY. Nevertheless, In Jan 2023, notably, exports reached 1.6 Mmt, a 0.5 Mmt increase YoY. Thus, what are the leading destinations for Ukrainian Wheat in January 2023?



Turkey Remains the Main Destination for Ukraine Wheat in Early 2023


The leading destination for Ukrainian Wheat in MY 2021/2022 was Egypt, reaching 3.8 Mmt, an 0.9 Mmt increase YoY, followed by Indonesia with 2.7 Mmt, 0.65 Mmt higher YoY. In MY 2022/2023, Ukrainian exports to Egypt and Indonesia reached 0.5 Mmt and 0.4 Mmt, respectively, between Jul 2022 and Jan 2023. Meanwhile, Turkey ranked as the leading destination during the same period, reaching 3 Mmt, and increasing by 1.2 Mmt YoY. Spain ranked second with 1.5 Mmt, followed by Italy with 0.5 Mmt, rising by 1.1 Mmt and 0.2 Mmt YoY, respectively. So far in February 2023, Ukrainian exports reached 0.6 Mmt, with 0.3 Mmt heading to Turkey and 0.2 Mmt to Spain.



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