Fundamentally Speaking

No surprise as Russia had telegraphed for weeks that it was withdrawing from an international agreement that allowed Ukraine to resume much of its Black Sea grain exports, raising concerns about a key link in the global food supply chain.

Russia has repeatedly threatened to pull out of the agreement, demanding that the West facilitate its own exports of food and fertilizers while also claiming that it is not functioning for the benefit of the countries that it was intended for.

Russia's invasion of Ukraine last year forced a halt to all exports from Ukraine's main Black Sea ports but then an agreement between Russia, Ukraine and Turkey, facilitated by the United Nations, was signed in Istanbul in July last year, permitting Ukrainian exporters to resume shipping corn, wheat, sunflower oil and other goods from three ports around the city of Odessa.

Ukraine had exported more than 32 million tons (mmt) of food products since shipments resumed last August including 16.9 mmt of corn and 8.9 mmt of wheat.

Before the conflict, Ukraine was exporting roughly 25 to 30 mmt of corn a year, mostly through the Black Sea and 16 to 21 mmt of wheat as this country over the past decade had become quite an agricultural powerhouse.

This chart shows Ukraine's percent of global sunflower oil production and exports on the right-hand axis and its percent of global wheat and corn production and exports on the left hand-axis.

Starting with sunflower oil, Ukraine is one of the largest producers of this vegetable oil in the world having accounted for over one third the global supply and over half world exports of sunflower oil.

Due to the war, the percent seen for the 2023/24 marketing year at 38.2% is about comparable with this year.

As for corn, their production almost quadrupled from the 2010/11 season to over 42 mmt the year before the invasion back in the 2020/21 season.

USDA is forecasting a plunge to just 25 mmt this year as their percent of global corn trade moved from just 5.5% to as high as 17% but is now seen falling back to barely under 10%.

Ukraine's wheat production actually doubled from 16.8 mmt in the 2010/11 season to over 33 mmt two years ago but has now fallen back to just 17.5 mmt for the coming season as their share of world wheat trade is down to 5.5%, less than half the 10.8% in the 2019/20 marketing year.

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