Ukraine’s grain losses could exceed $3.2 billion

Ukraine, one of the leading global agricultural producers and exporters, could suffer grain and oilseeds losses over $3.2 billion this year amid its war with Russia that has sharply increased production and logistics costs.

Ukraine, which is among the world’s top exporters of wheat, corn, barley and sunflower oil, traditionally has enjoyed a profitable agricultural sector. Ukrainian authorities and farmers did not report financial results in 2022.

Before Russia’s February 2022 invasion, Ukraine shipped the bulk of its exports through deepwater ports on the Black Sea, which have been fully or partially blocked since then. Limited export opportunities via small ports of the Danube River and rail to Eastern Europe, have multiplied logistics costs and reduced the price traders can offer farmers.

The port closures also have led to a sharp rise in the price of imported fuel, seeds, fertilizers and spare parts for agricultural machinery. The increased costs are hurting bottom lines and threatening to further reduce planted areas in coming years.

The Agrarian Council, Ukraine’s largest agribusiness group, said the cost of wheat production in 2023 was about $146 a tonne, with an average selling price of $102. Farmers spend $149 to grow corn, and they can sell it for $94. The Council said that in 2023, even sunflower and rapeseed production would be unprofitable and only soybeans would give some profit to farmers.

Producers said the large losses already have led to reduced plantings for the 2024 crop.

Farmers unions declined to forecast the area to be sown for the 2024 wheat harvest, while the Ukrainian agriculture ministry is still keeping its winter wheat sowing forecast at around 4.4 million hectares.

Unfavorable weather also may impact the sowing area this autumn. Ukraine is a traditional grower of winter wheat, barley and rapeseed.

State weather forecasters said this week that prolonged absence of rain across most Ukrainian regions had created poor conditions both for the ongoing sowing of winter crops and for the plants already sown.

Farmers have sown 3.02 million hectares of winter wheat as of Oct. 16, compared with 2.5 million hectares at the same date a year ago, agriculture ministry data showed.

Ukraine’s grain exports in the 2023-24 season so far have reached 7.8 million tonnes, compared to 11.5 million tonnes at roughly the same time last year, according to data from the agriculture ministry.

The exported volume included 3.99 million tonnes of wheat, 3.04 million tonnes of corn and 654,000 tonnes of barley.

Ukraine is expected to harvest 79 million tonnes of grain and oilseed in 2023, with 2023-24 exportable surplus totals of about 50 million tonnes.

Tags: forecast, exports, Black Sea, corn, rail, winter crops, ports, grain, costs, barley, losses, winter wheat, Danube River, oilseeds, wheat, Ukraine, rapeseed, Russia, crop, sunflower oil