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14 I Companies & Markets bne August 2023
Russia remains world grain production and export leader while Ukraine’s production and export tumbles
Ben Aris in Berlin
Russia has solidified its position as the world's top wheat exporter as the 2022/23 agricultural trading year comes to an end, the US Department of Agriculture (USDA) says in its latest update on July 13.
“With record production of 92.0mn tonnes, Russia's total wheat supply exceeded 100.0mn tonnes for the first time. With ample supplies, no export restriction for the entire year, and competitive prices, Russia is estimated to export 45.5mn tonnes in 2022/23. Its primary destinations are in the Middle East, North Africa, and Central Asia,” USDA said.
Russia has brought in a new all-time high record harvest of 153mn-155mn tonnes of grain, President Vladimir Putin said in March, smashing the previous record of 135.4mn tonnes of grain in the 2018/19 agricultural year.
The wheat harvest is expected to be a strong 85mn tonnes, according to the USDA and wheat exports to reach 47.5mn tonnes this year.
Russia's agricultural ministry upped its forecast for this year's grain harvest from 123mn tonnes to 130mn tonnes in June (chart), if the weather is good.
Russia's grain silos are full to bursting following an all-time record harvest in the previous agricultural year, but sanctions restrictions on shipping mean farmers have been struggling to get their grain to the international markets and warned that $3.4bn worth of grain may rot if more transport routes out of Russia cannot be found.
And Russia should be able to earn good money from exports after the United Nations Food and Agriculture Organization raised concerns in May that drought caused by global warming will depress this year’s harvest in France and another four of the five big grain producers.
On top of that the World Meteorological Organisation announced on July 4 that there is a 90% probability of an El Niño event in the second half of this year that will warm the surface
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Russia has been reaping record large harvests and is making billions of dollars from exports, while the Ukrainian agricultural sector is devastated by the war.
of oceans that could have a major negative impact on things like food production and energy demand. The WMO also said this week that the world has just experienced its hottest day on record as record breaking heat waves sweep the world.
Looking ahead to the 2023/24 agricultural year, Russia's wheat crop is forecasted to be lower at 85.0mn tonnes, says USDA. However, large carry-in stocks will ensure that wheat supplies remain over 100mn tonnes for the second consecutive year. With strong import demand from key markets such as Egypt, Iran, and Algeria, Russia's wheat exports are projected to reach a new record of 47.5mn tonnes in 2023/24.
In contrast, Ukraine's wheat production in 2023/24 is forecasted to be significantly reduced due to the war with Russia. The crop is expected to reach 17.5mn tonnes, the smallest in over a decade.
With sharply reduced supplies and uncertainty surrounding the future of the Black Sea Grain Initiative, Ukraine's wheat exports for 2023/24 are forecasted to be lower at 10.5mn tonnes, down more than 40% from the pre-war average. The shift in export destinations during the war, primarily to Europe, was influenced by ease of shipment and increased demand in some EU member states due to drought.
On a global scale, the production outlook is mixed, says USDA, with smaller crops in Argentina, Canada, and the European Union offsetting larger crops in the United
States and Pakistan. Global trade is forecasted to decrease slightly, with reduced exports from Argentina and Canada outweighing higher exports from Russia and Australia. Import demand is expected to decline in countries such
as Pakistan, Afghanistan, Morocco, and Nigeria. Global consumption is projected to increase, mainly driven by larger feed and residual use in China. Global stocks are forecasted to decrease, particularly in China and Russia, reaching the lowest level since 2015/16.
China is playing an increasingly important role in the agricultural markets and is currently Ukraine’s biggest