UAC: Ukrainian grain exports are close to pre-war levels

Ukraine's grain exports were likely to rise back to their pre-war level in a couple of years thanks to the successful operation of the maritime grain corridor, Ukrainian Agrarian Confederation analyst Artem Havrysh said in an interview with S&P Global Commodity Insights.

Ukraine has been exporting 4 million-5 million metric tons per month of different agricultural products since February. Before the war, it used to be 6 MMt. "So, we need 1 MMt to reach the pre-war level," Havrysh said.

Ukraine launched its own corridor after Russia unilaterally expressed its desire to withdraw from the Black Sea grain deal in mid-2023. Thus, on Aug. 15, 2023, the Ukrainian Sea Corridor became operational and was still functional, helping farmers export their grain.

"Currently, export figures are already very close to pre-war levels. As a result, between February-June 2024, Ukrainian farmers were able to sell all their transitional residues from 2022 and 2023", Havrysh said.

"During the 2023-24 marketing year, Ukrainian farmers exported about 70 MMt of agricultural products, about 44 MMt were exported through seaports, not even taking into account the Danube railway transport."

Ukraine was able to export a record volume of agricultural products in April 2024 which was 7.2 MMt, of which 6.4 MMt exports were made through seaports. During the operation of the Black Sea Grain Deal, Ukraine exported record agricultural products of 5.8 MMt in March 2023. "Recently, the share of export of agricultural products through ports is 87%...," Havrysh said.

Mykolaiv ports resumption

Most agricultural products are exported through ports in the Odesa region of Ukraine. As the Black Sea route is doing quite well amid military security, the country expects to restore the Mykolaiv region ports, Havrysh said.

"The opening of Mykolaiv port is more promising provided military security is ensured. This will definitely increase the volume of exports to pre-war levels."

Since the beginning of the full-scale invasion, Mykolaiv ports have remained blocked.

Giving an update on the new Danube export route plan announced by the Ministry of Infrastructure in February, Havrysh said: "I think the project is closed now due to irrelevance and tight cost. This route is not so efficient and competitive than the normal operational seaports.... It is a backup option."

The Danube project was considered because of a lack of confidence in the stability of the Black Sea corridor and, most importantly, the blockade of road and railway checkpoints by Polish farmers. Currently, these problems do not exist, he said.

Trade with other countries

The operation of the maritime corridor allowed Ukraine to export grains to its pre-war traditional markets -- Asia and Africa. China, one of the traditional markets, buys mostly corn, wheat meal, barley and sunflower oil from Ukraine, Havrysh said.

"During January-July 2024, we saw an increase in China's imports of sunflower oil. It is not yet at the highest level. Currently, China has a share of 7.4% in the total export of agriculture products from Ukraine."

Trade with China may grow in the long term, Havrysh said. The Minister of Foreign Affairs of China said it will continue to increase grain imports from Ukraine and work together to maintain uninterrupted logistics channels and international food security.

The EU is also an important export market for Ukrainian grain. However, the EU's 2024-25 renewed trade agreement with Ukraine has certain restrictions for duty-free trade of corn and other farm products.

Havrysh said, the emergency brake for sensitive products, including corn, mentioned in the renewed deal is calculated as the average number of exports from July 2021 to December. 2023.

That set the limit for Ukrainian corn exports to the EU at 11.2 MMt. According to the European Commission, EU nations have imported 7.7 MMt.

"Given that Ukraine's corn harvest in MY2024-25 is predicted to be lower than last year, it can be assumed that it may not even reach the export limit for corn this year," Havrysh said.

The forecast for Ukraine's corn harvest in MY2024-25 was expected to be at 24 MMt. "Our [Ukraine's] most important export markets for corn are China, Spain, Egypt, the Netherlands, Turkey, Italy, Israel, Portugal, the UK, Germany, Korea etc.," Havrysh said.

As for Ukrainian wheat, UAC's export estimate was 14-15 MMt for MY2024-25.

The main export markets for Ukrainian wheat are Egypt, Indonesia, Turkey, Pakistan, Bangladesh, Yemen and Algeria. In addition, Spain began to buy a significant amount of Ukrainian wheat since 2021, Havrysh said.

IC UAC according to S&P Global Commodity Insights