By Tyler Durden
Black Sea research firm SovEcon reports that Ukraine, one of the world’s top grains exporters, will experience dramatic output declines in the 2022 harvest year due to the Russian invasion.
Ukraine’s main agricultural export products are corn and wheat. Before the invasion, Ukraine was the second-largest supplier of grains for the European Union and one of the largest suppliers for emerging markets in Asia and Africa. Breaking down the numbers, Ukraine produced 49.6% of global sunflower oil, 10% of global wheat, 12.6% of global barley, and 15.3% of global maize.
SovEcon expects Ukraine’s 2022 corn harvest to plunge 35% from 41.9 million tons last year to 27.7 million tons this year. This year’s estimated wheat harvest has been cut to 26 million tons from an earlier outlook of 28.3 million tons, compared with 32.1 million tons last year.
SovEcon, which specializes in agricultural markets, said the regions affected by conflict account for 40% of the country’s corn and wheat production. They said plantings and yields would be impacted by fuel shortages, lack of workers and fertilizer, and fieldwork challenges due to the conflict. Also, a weather component of drought could affect wheat-producing areas.
However, the research firm says estimates are based on Russia reaching a ceasefire deal with Ukraine, allowing farmers to begin fieldwork in April as spring is around the corner.
What if the conflict continues to rage on and or for whatever reason, fieldwork in some areas cannot be completed due to shortages of equipment, fuel, seeds, fertilizer, and labor? Then wait?
Harvests could be even lower than SovEcon’s current estimates and may propel global food prices even higher. The UN projects global food prices could rise another 8-20% from current levels.
Meanwhile, Ukraine has enforced protectionist measures to ensure domestic stability of its food supply by banning wheat and other commodities exports. This move will result in higher global food prices, and countries that depend on Ukraine for their food needs may experience shortages. We explain what happens next in the ag note “Soaring Wheat Prices Leave These Countries Susceptible To Uprisings.”
… and then there’s this tweet:
Cannot stress this enough. There's credible estimates that suggest that Ukraine's yields in 2022 might be reduced by half. Even a 10% decline in production would have massive implications to world hunger and global stability.
Food security is national security. https://t.co/zOnyDU65n3
— Nathan Carson (@ndcarson) March 16, 2022
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