Black Sea disruptions could redistribute up to 23 mln tons of grain by year-end — AgResource

Further disruptions to grain exports from the Black Sea region could lead to a major reshaping of global trade flows. According to AgResource, if the war and shipment disruptions persist at least through the end of the year, other exporting countries will have to replace significant volumes of Ukrainian and Russian grain.

Analysts estimate that around 15 mln tons of wheat and 7–8 mln tons of corn could shift to alternative suppliers. This means that demand for a total of 22–23 mln tons of grain could be redistributed among other global exporters.

The EU would be the first choice for importers due to its geographical proximity to the Black Sea region. However, drought and deteriorating crop prospects are limiting Europe’s ability to supply the additional wheat volumes required by the global market.

AgResource also points to Argentina and Australia as potential alternative suppliers, but their new crops will not reach the global market immediately. Argentina’s new harvest is expected in November, while new-crop Australian grain will become available for export in late October-November. This creates a supply gap during which replacing Black Sea volumes will be particularly difficult.

Growing risks to supplies from Ukraine and Russia are already being reflected in global prices. On August 27, December wheat futures in Chicago rose 1.7% to $7.60¾ per bushel, reaching a three-year high. The market is pricing in the risk of further Black Sea export disruptions and the need to secure grain from alternative origins.

Tags: wheat, Ukraine, Russia, corn, export, Black Sea region