Steve kell: Black Sea War creates price swings both ways

One of the most compelling and dynamic factors influencing world grain markets over the past two years has been the Russian invasion of Ukraine and its impact on global commodity prices.

In the early days of the war, there was a substantial degree of panic in wheat and corn markets as the world’s 4th largest producer of wheat was at war with the world’s 7th largest producer of wheat, and prices rose to reflect the anxiety over supply. Two years later the battle scars of war have changed the export pathways for Ukrainian producers to access international markets, and those changes are now having a negative impact on our domestic grain values.

While not at pre-war levels, Ukraine is still a massive producer and exporter of grains. For 2023, it is estimated that Ukrainian farmers harvested 80-million metric tonnes of grains and oilseeds. They have about 30-million tonnes of internal domestic consumption of these crops, and will export close to 50-million tonnes of grain in the current crop year.

The most important thing to understand about Ukrainian grain logistics is to appreciate the scale of their operations. Prior to the Russian invasion back in 2020 and 2021, the Ukrainian Black Sea Grain terminal could reach a peak capacity of exporting as much as 6 million tonnes of grain each month, (to put that in perspective, the Ontario “Bay Ports” in the Great Lakes and St. Lawrence Seaway export about 3.5 million tonnes per year).