Global supplies of grain are plentiful for now, but at greater risk
nights of Russian attacks, Ukraine’s ports are counting the cost. The latest bombing, which targeted the Black Sea hub of Odessa and nearby Mykolaiv early on July 20th, left at least two dead and more than 20 injured. Some 60,000 tonnes of grain have been burnt; piers and terminals have also been hit. Kernel, Ukraine’s largest producer of sunflower, said damage at its grain storage and handling infrastructure could take a year to fix.
The sudden reaction is partly rooted in disappointment. Over the 12 months of its existence, the deal had allowed some 33m tonnes of Ukrainian grain and oilseeds to flow out, helping to stave off a global food crisis. This helped bring wheat prices, which had surged to $1,200 a bushel in March 2022, down by more than a third; they fell to $591 a bushel, their lowest in nearly two and a half years, in May.
Ukraine typically accounts for 10% of global wheat exports and 10-15% of maize exports. The loss of a sizeable chunk of its supplies is therefore significant. But it is not yet a disaster. Extraordinarily strong wheat exports from Australia and Russia last season mean the global larder is not bare. Canada’s wheat shipments are rebounding after crippling droughts in recent years. American and European crops look set to beat those of 2022.
Greater concentration of supply makes the market more vulnerable to a further shock. That looks all too possible. Dry weather is already causing downward revisions to output in Argentina, Canada and the EU; heat is also threatening America’s Midwest. Granted, lower exports from these places may be partly compensated for by greater shipments from Russia, whose wheat-export market share could reach 22% this season. But that is not particularly reassuring.
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