bread
Experts believe that in view of the harvest season in the northern hemisphere, the interruption of the route will not have a major impact on Ukraine’s export of 33 million tons of grain in a year, but it will inevitably cause disruption and impact. Medium-term food price inflation.
limited immediate effect
The situation is very different now than when Russia launched an attack on Ukraine in late February 2022, which disrupted navigation in the Black Sea, the main export route for Ukrainian agricultural products.
Ukraine was then the world’s largest exporter of sunflower oil and the fourth largest exporter of wheat and corn.
The opening of the corridor on 1 August 2022 has brought relief to importing countries, particularly those in the Mediterranean rim and Africa, leading to lower global prices after reaching unprecedented levels in May.
Grain production in Ukraine has almost halved in two years, with maize output forecast at 25 million tonnes and wheat production at 17.5 million tonnes in 2023-24, compared with 42 million tonnes and 33 million tonnes in 2021-22, respectively. The latest report from the Department of Agriculture: U.S. Agriculture.
“In 2023-24, compared to the previous season, wheat production will be reduced by 6 million tons and corn production will be reduced by 10 million tons,” said Agritel analyst Gauthier Lomolga.
The situation is less tense as export volumes are reduced and the northern hemisphere is harvesting.
“Future demand will become clear at the end of the harvest season. The market is in a period of calm and has not reacted much to the suspension of the agreement,” Lomolga added. Wheat prices rose less than 1 percent. Euronext.
Furthermore, Edouard de Saint-Denis, an expert at Plantero & Partners, said that in recent months, “we have noticed congestion in the Bosphorus and very slow transit traffic”, especially due to the reduced number of ships. Russia conducts inspections of ships using the channel.
Grain Export Agreement.. General Features
wild variation limit
Even before the maritime corridors opened, the EU had established land and river “solidarity corridors” designed to boost Ukrainian exports in Europe.
The Farm Foundation, a think tank specializing in global agricultural issues, estimates that half of Ukraine’s exports now pass through these corridors, mostly through Poland and Romania.
“One of the questions raised was whether the EU, which has absorbed 50 percent of Ukraine’s food supplies since the conflict began, would be able to re-export those quantities,” the foundation said.
The EU wants to improve land availability, especially through the EU-Ukraine border rail coordination project, but this will take time.
“We could speed things up a little bit, but given the volumes involved, we couldn’t solve the problem,” Edward de Saint-Denis said.
medium term concerns
There is currently no shortage of wheat in the world, but Damien Verkamper, an expert from the company “Inter-Cortage”, confirms that “most of the exportable wheat is in Russia, whose stocks are about 12.5 million tons” and that it is the world’s largest cheap wheat. “
Given the promising harvest season, Russia could make up at least part of the shortfall, as could the EU. But this will intensify the third country’s dependence on Russia. Once a major weather accident occurs, the product gap will be difficult to make up.
Here also a distinction must be made between corn and wheat. China, the biggest beneficiary of the sea lanes for corn, will be able to turn to Brazil, which is currently selling at lower prices and recording record harvests.
But for baking wheat, the situation is more complicated. If the quantity is sufficient, it is possible to supply the importing countries, but at what cost?
“The permanent closure of the corridor will affect food prices and thus food security,” Aliyah Tayeb Sharif said, according to AFP.
Some countries have recently experienced difficulties in paying certain requests for proposals.
The shutdown could also weaken food aid because “Ukraine is a supplier to the World Food Programme: About 8% of Ukraine’s wheat exports go to the World Food Program and are distributed to countries such as Yemen, Afghanistan and the Horn of Africa”, the expert express.
West broadly condemns Russia’s withdrawal from grain export deal