Ukraine policy bites into Dec-Jan export volumes

Ukraine total cereal and legume exports are significantly higher in the current marketing year to date, compared with 2023-24, despite the pace slowing dramatically since the beginning of December. The slowdown follows the government’s introduction of rules aimed at curbing tax avoidance on agricultural commodities.

In a bid to prevent exporters using artificially low sales prices to avoid paying tax, the government on December 1 introduced minimum export prices, gave the country’s tax and customs service new controls over shipments, and limited export authorisation to those firms that currently pay value-added tax.

Essentially, the government prohibits agricultural sales at prices below those set by the government. The minimum acceptable export prices are calculated using state customs service data of previous month trade-and-delivery terms, and applying a 10 percent discount.

According to a government statement, the drop in agricultural export volumes since then relative to previous months, and the same periods in the 2023-24 marketing year, is a direct result of exporters implementing and adapting to the modified export conditions.

Ukraine’s UGA traders union noted that key agricultural commodity export volumes in December fell by 34.7pc year on year, with shipments via Ukraine’s Black Sea ports the worst hit. UGA data reveals that grain, oilseed and vegetable oil exports collectively totalled almost 4.7 million tonnes (Mt) in December 2024, down from 7.2Mt in December 2023. Wheat exports fell from 1.84Mt to 789,000t, while corn shipments fell from 3.12Mt to 2.5Mt.

According to the latest data released by the Ministry of Agrarian Policy and Food of Ukraine last Friday, cereal and legume exports from the beginning of July last year to January 24 this year totalled 24.75Mt, 2.5Mt of which have been shipped this month. This is up from 22.25Mt for the previous corresponding period, although the related January portion was much higher in 2024 at 3.68Mt.

Corn made up the most significant proportion of the program at 47.4pc, followed by wheat at 42.7pc and barley at 8.2pc. The three commodities collectively make up 98.3pc of the season-to-date exports via all land and seaborne pathways.

The wheat component came in at 10.56Mt, 21.1pc higher than the 8.72Mt shipped from 1 July 2023 to 24 January 2024. The January 2025 component was 650,000t compared to 1.1Mt a year earlier, reflecting the impact of the government restrictions.

At 11.73Mt, corn exports were actually 2.3pc lower than the 12Mt shipped in the previous corresponding period, with the January component of 1.82Mt 23.4pc lower year on year. The export pace immediately post-harvest was ahead of 2023-24, but being a summer crop, it is harvested after the winter cereals. This means that new crop exports start later so the minimum export price policy has had a greater impact on the corn order flow.

On the barley front, season-to-date exports of 2.04Mt were 60pc higher than the 1.27Mt shipped in the first 30 weeks of the 2023-24 marketing year. However, like wheat and corn, the January number was well down season on season at just 36,000t compared to 199,000t a year earlier.

The USDA’s current 2024-25 wheat export estimates for Ukraine is 16Mt, down from 18.6Mt in 2023-24, which means the program is 66pc completed, with 30 weeks, or around 58pc of the export season behind us. The corn export forecast is 23Mt for an October-September marketing year, down from 29.5Mt last season, putting it at 51pc completed with 17 weeks, or around 33pc of the marketing year passed.

A lifeline for exporters following Russia’s invasion in February 2022, Ukraine’s grain exports via the Romanian Black Sea port of Constanta from 1 January to 30 November 2024 were down by 54pc to 6Mt compared to 2023. Romania has assisted Ukraine with the export of almost 29Mt of grain since February 2022, but the volume through Constanta dropped to just 340,000t in November last year.

The drop reflects Ukraine’s reliance on its own Black Sea ports, despite constant Russian attacks on logistics and shipping infrastructure. The increase in domestic port throughput has been facilitated by the unmitigated success of its protected maritime export corridor which hugs the western Black Sea coastlines of Ukraine, Romania, Bulgaria and Greece before exiting via the Bosphorus and on to international customers across the globe.

The Agriculture Ministry also recently released its planted area forecast for this year’s harvest. Ukraine’s farmers plan to sow 11.1 million hectares (Mha) to grains this year, very similar to last year. The estimated area planted to winter cereals last autumn for harvest this year was marginally lower than the previous year, with around 5.2Mha of winter wheat and 600,000ha of winter barley.

The spring wheat area is expected to be up 28pc to 223,000ha, but the spring barley area forecast of 790,000ha is down 5.8pc compared to 2024. The corn area is expected to be 2.4pc higher compared to 2024 at 4.15Mha. The area under oilseeds is projected to be 8.9Mha, including 5.2Mha of sunflowers, up 5pc year on year, 2.4Mha of soybeans, down 9.4pc compared to last year, plus 1.17Mha of winter and spring rapeseed, down 8pc relative to plantings for the 2024 harvest.

Tags: tax, Ukraine, agricultural commodities, exports, Black Sea ports, corn, legume, grain, cereal, barley, prices, Oilseed, Vegetable Oil, wheat, shipments