Is the new-crop grain storage problem solved?

UkrAgroConsult

Article author:

Maksym Kharchenko

Freight Market Analyst

6.5 M mt of grain and some 0.9 M mt of rapeseed have been harvested as of July 21. The average grain yield is much poorer than last year. The low yield level resulted from a number of factors, both usual (for example, shriveled grains in the south) and specific ones (such as partial crop damage due to the hostilities).

In early August, the Ag Ministry of Ukraine will announce distribution of plastic bags for grain storage, which are supplied by international partners. There is confirmation of additional import of plastic bags for 10-15 M mt of grain, including equipment for stuffing and unstuffing.

In the opinion of UkrAgroConsult, with the current pace of exports and new-crop arrivals, the shortage of silo capacities in MY 2022/23 may reach 15 M mt. So, the shortage that was inevitable because of slow exports, high carryovers and temporary occupation of part of the silo industry can be overcome due to assistance from other countries of the world.

Currently, the distribution mechanism of these grain storage bags is unknown. Now the prices for plastic silo bags have increased 40% compared to the pre-war period, and farmers will have to wait for several weeks to receive them. At the same time, the cost of grain storage in bags is EUR 5-6/mt. Therefore, for plastic silo bags to pay back, grain is to be stored in them for at least three months.

An alternative for farmers could be so-called “on-farm warehouses” – converted cowsheds or other technical structures, which are usually not taken into account by specialists when making overall assessments of the country’s silo capacities.

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Tags: yield, imports, storage, exports, grain, rapeseed