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Black Sea Export Deal Easing Ukrainian Grain Flows, Bringing Down Prices, as Ukraine’s Wheat Harvest 91% Complete

Bloomberg writers Elizabeth Elkin and Megan Durisin reported yesterday that, “Ukrainian grain flows are pushing down global prices as the newly opened crop-export corridor shows initial success.

More than 500,000 tons of foodstuffs aboard 21 ships were exported from the country’s major Black Sea ports in the first half of August, under a deal agreed late last month.

“That’s far below a normal pace, but is providing some relief to grain supplies strained by Russia’s invasion and bad weather curbing harvests elsewhere.”

Elkin and Durisin explained that, “Ukraine’s grain exports in the 2022 to 2023 season are now seen at 30.4 million tons, compared with a July outlook for 22.6 million tons. Before the war, 5 to 6 million tons could depart Ukrainian ports monthly.

“Still, prospects for an acceleration in flows are weighing on grain prices…[and]…Ukraine also continues to ship crops via alternative land and river routes established during the war.”

“Ukraine’s New Grain Corridor Is Working, Bringing Down Prices,” by Elizabeth Elkin and Megan Durisin. Bloomberg News (August 18, 2022).

Also yesterday, Dow Jones writer Kirk Maltais reported that, “A meeting Thursday between Ukraine, Turkey and the United Nations that discussed the continuation of the Black Sea grain export corridor, among other topics, contributed to pressure on wheat futures. The Wall Street Journal reports that the meeting discussed ways to protect Ukraine’s shipments, along with other security issues.

“The Turkish defense ministry says that Ukraine has exported 622,000 tons of grain and other food products from the three ports covered by the export agreement, with 43 ships having sailed under the agreement.”

Reuters writer Naveen Thukral reported today that, “Shipments of Ukrainian wheat continue to leave Black Sea ports, easing global demand. Twenty-five vessels have left under a U.N.-brokered grain export deal.”

Also today, Reuters writer Pavel Polityuk reported that, “Ukraine’s 2022 wheat harvest is 91% complete at 17.4 million tonnes despite hostilities in eastern and southern regions, grain traders union UGA said on Friday.”

The article added that, “The union’s statement said farmers had harvested a total of 25.7 million tonnes of grains and oilseeds so far.”

Meanwhile, Dow Jones writer Yusuf Khan reported yesterday that, “Global output of grain is expected to fall 2% in 2022-23, led by a reduction in corn and rice production, the International Grains Council said Thursday.

“The London-based intergovernmental body said it has cut grain forecasts for the current year by 4 million metric tons to 2.248 billion tons, and consumption estimates by 3 million tons to 2.274 billion tons.

“In the 2021-22 season, global grain production came in at 2.291 billion tons.”

In its monthly Feed Outlook report earlier this week, the USDA’s Economic Research Service indicated that, “Global 2022/23 coarse grain production is projected down 7.7 million tons this month to 1,469.5 million, 35 million tons lower from last year.”

In more narrow news regarding U.S. agricultural production, Donnelle Eller reported on the front page of today’s Des Moines Register that, “Faced with skyrocketing expenses, Iowa farmers urged U.S. agriculture and trade leaders to ease tariffs on fertilizers in an effort to cut their costs to grow next year’s corn, soybeans and other crops.

“U.S. Agriculture Secretary Tom Vilsack, U.S. Trade Representative Katherine Tai and U.S. Rep. Cindy Axne, a Democrat, met with Iowa farmers and ag leaders on Thursday for more than an hour at a farm near Woodward.

The Des Moines Register (Front Page – August 19, 2022).

“Iowa farmers told the officials, who touted the benefits of the $750 billion Inflation Reduction Act that President Joe Biden signed into law this week, that the prices of fertilizer, seed and other products needed to raise crops are exploding.”

Eller pointed out that, “An Iowa State University study in June showed that some fertilizer prices are as much as four times higher now than in 2020, while crop prices have roughly doubled.

“U.S. farmers rely on nitrogen, potash and other fertilizer imports from China, Russia, Canada, Morocco and other countries to grow their crops. Some of those imports face U.S. tariffs.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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