Wet weather has hampered cereal crops in all parts of the UK in the past six months but we’re not alone – many other countries are also struggling as The Scottish Farmer has discovered ...
Ukraine: frosts and grain exports
Recent severe frosts across Ukraine’s northern and eastern regions could significantly reduce this year’s grain and oilseed harvest, according to analyst APK-Inform. Scientists reported that early May temperatures dropped to as low as -2°C and went as far down as -9°C in some areas.
These frosts have damaged crops of wheat, barley, rapeseed, and peas, with potential yield losses estimated between 20% and 30%.
Despite these challenges, Ukraine’s grain exports remain strong. By May 20, the 2023/24 marketing season had seen exports reach 44.4mt, including substantial amounts of wheat, corn, and barley. The government anticipates a total harvest of 81.3mt this season, with an exportable surplus of around 50mt.
Argentina: labour strikes hit home
In Argentina, the soybean harvest in the important Pergamino region has been delayed by rains and low prices, leading to the slowest soy sales in a decade. By early May, farmers had sold only 31% of the expected 49.7mt harvest, the slowest pace since at least the 2014/15 season.
This slowdown could strain regional supply, particularly as Brazil’s crop has also been impacted by floods. In addition, Argentina’s SOEA oilseed workers’ union began a strike to protest a labour reform bill backed by President Javier Milei.
This strike affects the Rosario area, a major hub for soybean processing and agricultural exports. The strike, initiated as lawmakers debated economic reform bills, could disrupt an industry crucial to Argentina’s economy, which relies heavily on agricultural exports for foreign currency.
Russia: wheat worries
In Russia, wheat futures surged in Chicago due to weather-related risks and potential escalation in the war with Ukraine. Key wheat-producing regions lost approximately 900,000 hectares of wheat due to frosts and recent dry conditions, raising concerns about the upcoming harvest.
Analysts predict that the lack of rainfall expected in the coming weeks will exacerbate these issues, potentially boosting demand for US wheat.
Meanwhile, Ukrainian drones attacked the Russian grain export port of Novorossiysk, highlighting the ongoing conflict’s impact on agricultural trade. The attack caused minimal damage but underscored Ukraine’s targeting of strategic economic points within Russia. The disruption to Russia’s wheat supply could influence global grain markets, with significant implications for wheat prices and availability.
Turkey: grain agreement renewal
Turkey’s Defence Minister Yasar Güler and his Ukrainian counterpart Rustem Umierov discussed renewing the Black Sea Grain Initiative, a crucial agreement for global food security.
This initiative, initially brokered in July 2022, facilitated the safe export of Ukrainian grain from key ports and lifted restrictions on Russian agricultural products. Despite its expiration and Russia’s subsequent threats to commercial vessels, Turkey’s diplomatic efforts aim to restore the agreement.
The resumption of this deal could stabilize grain exports from Ukraine, mitigating some of the disruptions caused by the ongoing conflict and ensuring a steady supply of grain to global markets. However, despite the risk of attack huge volumes of Ukrainian grain are still being shipped down the west coast of the Black sea.
China: new land grain corridor
China and Russia are collaborating on the New Land Grain Corridor (NLGC), a strategic initiative to diversify China’s food imports and mitigate geopolitical risks. This corridor, involving a specialised railway grain terminal in Russia’s Far East, aims to boost grain exports from Russia to China and other Asian markets.
The NLGC could reshape global food dynamics by increasing the competitiveness of Russian grain and reducing China’s reliance on traditional suppliers like the US and Australia.
This development might lead to price fluctuations in global wheat markets as China adjusts its sourcing strategy.
For the global agricultural sector, the NLGC highlights the need to diversify exports as trade barriers become increasingly common and volatile.
Brazil: flood hit harvest
Concerns about the impact of flooding in Brazil and buying by speculative traders has underpinned oilseed and soya prices recently. While the state agency for Rio Grande do Sol has reported that soyabean harvesting is almost complete, it states that quality is lower than before the heavy rain and that part of the remaining area might be abandoned.
Despite this Brazilian government agency, Conab increased its soyabean production estimate by 1.16mt to 147.7mt, there’s still a wide range in estimates meaning that uncertainty in the short-term.
UK: Increased wheat imports
UK wheat imports have been strong in 2024 with March figures totalling 199kt, meaning from July 2023 to March 2024 imports have reached 1.6mt, up 63.0% on the year.
Import pace had been sluggish but since December it jumped. For wheat imports including durum, the top five countries supplying the UK are Canada, Germany, France, Poland and Denmark, which account for an 87.3% share. Given the lack of high-quality, domestically produced wheat available, it is expected that the majority of imports are high-protein milling wheat. Canada has exported the largest volume of wheat to the UK, accounting for a 27.5%.
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