Domestic grain markets in Ukraine have crashed, raising the prospect that farmers in the country will not have the funds to plant out crops for the 2022-2023 season.
Masha Belikova, a senior grain analyst with Fastmarkets, an international grain and commodities market news agency, commented:
“Not being able to get grain out of the Ukraine lies at the heart of the problem.
“Currently, 6.5 million tonnes of last year’s wheat crop and 9 million tonnes of 2021 corn remains in store across Ukraine, either on farm or in facilities owned by domestic grain-buying operations.
“All this product is now overhanging the market.”
According to Belikova, the solution to this problem centres on the agreement reached by Ukraine and Russia last week, which would allow the safe passage of grain from Romania’s Black Sea ports, being enacted with immediate effect.
She said:
“The ending of the war is another option. But that’s unlikely to happen in the near future.
“There are large numbers of boats fully laden with grain that have been unable to leave Odessa since the outbreak of the war.
“Getting access to world markets for Ukrainian grain is the only way that the country’s farmers can access the much stronger international markets and funds for cereals and oilseeds.”
Ukraine support fund
But if this cannot be achieved, a support fund will have to be developed to allow grain growers in Ukraine access the finance they need to plan for next year.
“The authorities in Kiev are already talking to banks and other governments around the world with this objective in mind,” Belikova said.
According to the Dnipro-based analysts, approximately 11 million tonnes of grain have been harvested by farmers in Ukraine over recent weeks.
The breakdown is as follows: 8 million tonnes of wheat, and 3 million tonnes of other cereals.
“The wheat figure accounts for 46% of the total land area dedicated to that cereal crop in 2022,” Belikova explained.
“Yields are down, year-on-year, because of the drought conditions experienced across most of Ukraine’s grain growing regions over recent months.
“Obviously, the land occupied by the Russian army was not planted out this year. Fires over recent weeks, caused by the continuing conflict, have also served to reduce the total amount of grain that will be harvested in 2022.
Belikova concluded:
“In total contrast corn crops across Ukraine are looking very well at the present time. There is now the genuine prospect that the total corn harvest could come in at 27 million tonnes.”