Difficult Logistics Result in Decrease of Ukraine's Grain Exports

Canada: Canadian Wheat is seeing increased demand in various Asian markets as the presence of Ukraine begins to decline. During the first half of 2022-23, Ukraine exported only 8.4 million tonnes compared to 15.9 million tonnes during the same period last year, due to difficulties in competing with other exporters brought on by "extremely difficult logistics". Unfortunately, these logistical issues show no sign of improvement, and are compounded by Russia's threat to derail the United Nations-brokered grain corridor agreement, which is set to expire on May 18th.

As a response to farmer complaints regarding the price-damping effect caused by the large influx of Ukrainian grain being imported into Poland, Hungary, Slovakia, Romania, and Bulgaria, the European Union is preparing emergency measures to ban these imports. This move provides an opportunity for Canada to increase its market share in various Asian markets as competition from Ukraine decreases.

According to reports, only 345,600 tonnes of Wheat were shipped to Indonesia in the said period, as compared to 2.7 million tonnes that were exported in the previous year's same period. In contrast, Indonesia increased its Wheat import from Australia by 46 percent to 2.45 million tonnes and from Canada by 66 percent to 861,000 tonnes.

During the first half of the current year, Indonesia imported 1.05 million tonnes of Canadian Wheat, which is a notable increase from 709,300 tonnes purchased in the same period last year. Indonesia was Canada's second-largest customer with 2.15 million tonnes of Wheat, while Bangladesh stood third with one million tonnes, up from 404,900 tonnes the previous year.

For the first six months of 2022-23, Ukraine's sales to the market have decreased to 324,000 tonnes, compared to 632,000 tonnes during the same period last year. However, it would be inaccurate to assume that Canada is directly profiting from Ukraine's absence in these markets. The rebound in Canadian demand can be attributed to the higher production in 2022 and the excellent quality profile of Canadian products this year.

Canadian farmers witnessed a considerably enhanced non-durum Wheat harvest in 2022, yielding an estimated 28.38 million tonnes. The improvement showcases a remarkable 46% increase from the dry previous year. Canada is prominently known for selling Hard Red Spring Wheat (HRSW) in various markets in Asia, which competes in a distinct quality spectrum compared to Ukraine's winter Wheat. Interestingly, the two kinds of Wheat serve as each other's complement and are frequently blended.

This year, the Australian Prime Hard Wheat experienced quality issues, resulting in increased demand for Canadian and U.S. Hard Red Spring Wheat (HRSW) in Asian markets. As a result, Canada has been consistently increasing its export estimate for Canadian non-durum Wheat for the 2022-23 season in its monthly reports. The latest forecast now predicts 19.6 million tonnes of exports, up from the previous forecast of 18.2 million tonnes in September 2022.

Farmers are planning to plant 19.4 million acres of spring Wheat this season, marking a 7.5% rise compared to last year's planting. The overall Wheat planting, which includes durum and winter Wheat, is expected to reach a whopping 27 million acres- the largest crop since 2001.

Meanwhile, Ukraine is gearing up for yet another disappointing Wheat harvest. The country is projected to produce 16.5 million tonnes of Wheat in 2023, which is only half of the yield gathered in 2021 before the start of the war.