Miller Magazine Issue: 148 April 2022

MARKET ANALYSIS MILLER / APRIL 2022 108 Off the coast of Romania, another drifting mine was elim- inated. In total, Russia, according to them, untied more than 400 mines for the purpose of sabotage in the Black Sea, and some of them have already reached the shores of Turkey and other Black Sea countries. We de- fiantly faced with a new corn deficit – US lower than expected areas together with Ukrainian war planting could cut 30-35MMT from our expectations. Wheat is a key product for global food security. Corn is a basis for animal feeding. For the current season according to favorable weather conditions Ukrainian and Russian share in wheat and corn exports could be even higher but for today exports almost stopped. Ukrainian ports were a key border for grain exports – 95% of corn, wheat and barley are usually exported via the Black Sea and Azov Sea Port. All of them a blocked as per military actions. Meanwhile key Russian port – Novorossiysk – still operate. As per market information, exports volumes fall almost twice as international buyers do not want to buy Russian wheat for many reasons – high costs of insurance and logis- tics, sanctions or moral aspect. This means both Ukrainian and Russian exports will not reach target volumes in the 21/22 season. It means the market has to replace Black Sea wheat and corn demand. Unexported grains could be consumed domestically in Russia, but not in Ukraine as the pop- ulation there was around 38 million people before the war and now even lower. It means that Ukrainian domes- tic consumption will fall by 1MMT in wheat and around 0,5MMT in corn via lower poultry pro- duction. Same time EU consumption and exports should increase as 3 mil- lion Ukrainians have already moved to European courtiers and EU shell to sell more grains to North Africa first of all. Argentina, as well as Canada, could partly replace Rus- sian and Ukrainian wheat in North Africa which leads to lower stocks, but key problem here is fobbing and logisti- cal capacity. Still, the EU as the well-known seller will take major place here, but ending stocks could fall to 6-7MMT. As per East-South Asia, here market expected bigger vol- umes of Australian (+1MMT) and the US (+0,5MMT) wheat in the current season but ports facilities are limited as well. India can offer additional 2-3MMT of wheat to Bangladesh, Afghanistan, etc. 90% of Ukrainian wheat is winter crop which is already planted and remains in good condition. Usually in March farmers started to put fertilizers but due to lack of fuels and partly as per occupation or even military action it’s partly im- possible. Ukraine planted 6,5 mln ha with winter wheat for the next season and spring wheat areas last year were just 176k ha – it’s around 1MMT of the potential crop. In the worst scenario, –without spring wheat and without the first part of fieldworks on winter crops, excluding timely occu- pied territories-, the Ukrainian wheat crop could set just 14.4MMT, while the optimistic scenario – 23MMT, including Crimea areas which officially belongs to Ukraine but have been harvested by Russia for the last 8 years (0,7-1MMT of wheat yearly). Domestic consumption will be covered but without ports opening, Ukrainian crop will face export problems. So in the worst scenario, we should exclude Ukraine from exports S&D 22/23 almost totally. The current railway capacity is 7-8 MMT