How Ukraine Has Adapted To Continue Meeting Global Corn Demand

In 2017, the worldwide corn market was estimated to be worth 1177.25 metric tonnes. The market is expected to develop at a CAGR of around 5.3% between 2022 and 2027, reaching a value of over 1604.87 MMT by 2027.

Global breadbasket

Ukraine is a major producer of sunflowers, wheat, and other oilseeds. One of its core exports is also corn. More than 55% of the nation’s land is arable, and agriculture provides jobs for 14% of its population.

Prior to the conflict, Ukraine produced over 16% of the world's maize. In addition, its exports of grain accounted for roughly 8% of the global total. But the invasion of Ukraine did disrupt regional trade supply and raise doubts about Black Sea imports. Commodity prices inside the country therefore surged. In early April, maize futures contracts traded around $8 per bushel, the highest price since September 2012.

Having to adapt

There was some progress at the start of August when the Black Sea Grain Initiative was launched. This move enabled considerable volumes of commercial food exports from three main Ukrainian ports in the Black Sea - Odesa, Chornomorsk, and Yuzhny.

Some 25.5 million bushels of Ukrainian grain returned to foreign markets in the first month of the project. However, problems still existed. Damage from Russian missile attacks has reduced the amount of maize moving through Odessa compared to the other two ports in Ukraine.

After Russia abandoned the Black Sea grain agreement on October 29th, maize and wheat prices climbed once more. On November 2nd, the country was reopened to its citizens. The most vulnerable people all across the world will be adversely affected by such unexpected changes of events. Whatever the case may be, manufacturers and merchants will strive to fulfil customer needs.

One such cargo took place in June. On the 13th of June, a cargo ship carrying 18 thousand tonnes of maize arrived at A Corua. To avoid the Russian blockade, it was trucked to Swinoujscie, Poland, and then sailed across the Baltic. Ukraine established two corridors between Poland and Romania to facilitate the exchange of its cereals and avert a global food catastrophe.

Recent shifts

On November 15th, Ukraine proposed expanding the initiative to include the country's Mykolaiv Port and Olvia Port. Four days later, the overall agreement was extended for another 120 days. Nevertheless, uncertainties will remain as long as the war continues.

“Ukraine’s trade flows will likely continue to factor into corn (and wheat) pricing dynamics in the coming months. But the economic landscape is adjusting to Ukraine’s absence from the markets. Global usage rates have adjusted lower in response to high prices and tight supplies,” Farm Futures shares.

“However, the current paces of the “Grain Initiative,” while more rapid than the past five months, still fall short of the speeds needed to boost liquidity in the global corn market. For U.S. producers, that should help keep a stable floor under high prices during harvest, though prices will face substantial downturns if Russia allows for more Black Sea terminals to become operation or lets more Ukrainian grain volumes pass safely through the Black Sea.”

Furthermore, trade flows between the United States and China will continue to generate international concern, particularly as a strong dollar and local pressures in China may restrict maize volumes moved between the two countries. Corn supplies are expected to remain tight until 2023. However, this element is unlikely to raise the same worries about excessive expenses as what has been seen since the outbreak of the epidemic and the start of the war in Ukraine.

Sources: Purdue University, World-Grain.com, Farm Progress, DW