Ukraine Could Resume Wheat Exports Depending on Next Crop

By Volodymyr Verbyany (Bloomberg) —

Ukraine may ease wheat-export curbs as soon as next month, once it is confident that spring sowing is progressing enough despite Russia’s invasion, though export capacity remains strained with some seaports effectively closed by fighting, an official who oversees the country’s trade said.

The Cabinet will likely discuss whether it can remove licenses required from shippers to sell wheat abroad in April, after it estimates potential yields following planting and makes sure this year’s harvest will be enough to provide food security, Taras Kachka, deputy economy minister told Bloomberg News in a video interview Sunday.

The government introduced licensing in March to curb exports of major Ukrainian agriculture commodities like wheat, corn, sunflower oil, poultry and eggs, following Russia’s invasion the previous month. However, restrictions on corn and sunflower oil were removed last week, as the nation has stockpiled enough and farmers need foreign cash to keep their operations going.

“We hope that for wheat we will be able to resume exports as well,” Kachka said. “Sowing has begun and, fingers crossed, it will be as good as it can be. Once we see what the outlook for this year harvest is, and what our domestic stockpiles are, we will make a balanced decision.”

Spring Planting During a War

The eastern European nation is struggling to conduct its spring planting campaign in conditions that it hasn’t faced since the Second World War, with farmers having to work in fields under constant risk of shelling and fighting. The Agriculture Ministry estimates sowing areas may shrink by 30% to 50% from last year. The planting effort is vital for the country’s economy, which is heavily dependent on agriculture exports.

Another obstacle is how to ship out grains and oilseeds, as most of the country’s southern seaports typically used for exports have been blocked by Russian troops in regions near the Black Sea and the Sea of Azov. Even under such conditions, shippers managed to export more than 1 million tons of corn and 300,000 tons of wheat since the beginning of March, according to Kachka.

The government in Kyiv is considering redirecting export shipments to seaports that are under Ukraine’s control near the border with Romania, from which cargoes may later go further west to foreign markets via the Danube river. But the bottleneck is Ukraine’s railway that can ship just a few hundred thousand tons of crops per month under current circumstances, and that’s far below the volumes that can usually be exported via sea ports, according to the market researcher UkrAgroConsult. 

The first shipments via that route, via Izmail, took place last week, Kachka said. Izmail is an inland port in southwestern Ukraine, in the Danube delta region.

© 2022 Bloomberg L.P.

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