Ag export markets face extreme volatility and concerns about the future of exports from the Black Sea, an area commonly referred to as “the world’s breadbasket.”
Ukraine is a giant in the European agricultural landscape. It occupies the most fertile growing region in Europe, with more than 102.5 million acres of land – almost 70% of the country – devoted to farming. Agriculture is Ukraine’s largest export industry, with about 25% of exports flowing to Europe.
According to the USDA, Russia and Ukraine together account for around 29% of the world’s wheat exports, 19% of its corn trade and almost 80% of sunflower oil production.
In the realm of agricultural exports, Ukraine is:
- Top exporter of sunflower oil
- Fourth-largest exporter of corn
- Fourth-largest exporter of barley
- Fifth-largest exporter of rye
- Sixth-largest exporter of wheat
- Seventh-largest exporter of soybeans
Ukraine also produces significant volumes of poultry, eggs, forage and feed crops, potatoes, sugarbeets, and a variety of fruit and vegetables. According to United Nations statistics, Ukraine’s cereals and soybean output is estimated to reach 78 million tons by 2024.
Regarding export flows, Alistair MacDonald and William Boston reported in the Feb. 28 Wall Street Journal that, “Russia’s invasion of Ukraine is piling new troubles onto the world’s already battered supply chains.
“The conflict is also bottling up Ukraine and Russia’s vast commodity exports, sending the price of oil, natural gas, wheat and sunflower oil rocketing. Shipping from Ukrainian ports, an important corridor for grain, metal and Russian oil shipments to the rest of the world, has all but ceased.”
The majority of Russian and Ukrainian exports are shipped by way of the Black Sea. With the ports and railway systems shut down following Russia’s invasion, the supply disruption is already destabilizing the already shaky supply chain to countries dependent on those grain exports.
Egypt, the world’s top importer of grain, is scrambling to find other suppliers. For other countries like Tunisia and Morocco, a supply disruption of this magnitude could seriously destabilize the country’s economy.
The West retaliates
Western countries are slapping back at Russia through the pocketbook with increasingly tough sanctions. Reuters reports that major investment firms announced March 1 that they were cutting their positions in Russia. Their pronouncements came as ripple effects of sanctions on Russia were making themselves felt, with Visa and Mastercard blocking multiple Russian financial institutions from their networks. Finland, Britain and Canada are also stepping up weapons transfers, including assault rifles, upgraded ammunition and anti-tank weapons.
Shipping giant Maersk announced a temporary halt to all container shipping to and from Russia, deepening the country’s isolation.
On Feb. 28, the European Union, in solidarity with the U.S., the U.K. and Canada, agreed to eject some of Russia’s banks from the global financial system’s payments infrastructure Swift, essentially blocking money transfers in and out of the country.
The U.S. imposed sanctions on Russia's central bank and other sources of wealth, dealing a crushing blow to the country's economy and further punishing Moscow. European stocks took a dive March 1 after ceasefire talks between Moscow and Kyiv failed to reach a breakthrough. 
-
Carrie Veselka
- Editor
- Progressive Cattle
- Email Carrie Veselka
