Ukraine’s humanitarian corridor vindicated as 2023-24 exports rise 3%

The start of the Black Sea region’s new wheat marketing year from Monday, July 1 offers an opportunity to look back on the previous marketing year and to focus on Ukraine’s experience and the effect that the self-declared humanitarian corridor has had on the country’s agricultural exports

Fastmarkets analysis of data from Ukraine’s State Customs Service suggests that the corridor has been an unqualified success, overturning a slow start to the marketing year’s exports and setting up a pace that delivered a 3% year-on-year increase to overcome the obvious challenges facing a country at war.

On June 30, the official end of the marketing year, the export of grains from Ukraine amounted to 50.38 million tonnes, including corn. This was an increase of 3%, 1.4 million tonnes, over the corresponding period of the 2022-23 marketing year.

The increase was even more remarkable given that, over the three months from July to September 2023, the country’s main deep-water bulk agriculture export ports were limited to just 335,000 tonnes of exports.

Export pace lagged through the first half of the 2023-24 marketing year, falling 17% behind the previous year’s exports in the first three months of the marketing year. This was a time when the grain export deal brokered between the United Nations, Turkey, Russia and Ukraine was under severe strain amid mounting delays at key locations.

The volume of exports dropped sharply with Russia’s insistence on monitoring each ship coming into or leaving the Black Sea that was heading to or from a Ukrainian port. The deal eventually fell apart, with each side blaming the other.

But exports gradually began to recover in October 2023 after the Ukrainian government unveiled its alternative humanitarian route. Initially, the trade expressed concerns that it would be unworkable, but with confidence starting to improve, the export pace rebounded back to a normal level by December 2023.

That took the pressure off hard-pressed alternative export routes along the Danube, into the EU Black Sea port of Constanta, or via road and rail connections.

In this way, the Ukrainian humanitarian corridor has proven its effectiveness, surpassing the results of the Black Sea Grain Initiative, and allowing the country to gradually return to pre-war export volumes.

Moreover, while the sea route has regained its pre-war importance, export volumes via the Danube have decreased. The latest data from the country’s agriculture ministry showed that the share of exports going by sea reached 80% for the whole 2023-24 marketing year, up from 73% in the previous year.

The share of exports going through the ports along the Danube dropped by 9 percentage points to 30%, while the export share held by the Great Odesa ports moved to 49%, compared with 55% for the whole of the previous season.

Over the past five months, it has been stable at around 73% on average.

Along with more volume heading out of the Black Sea, and monthly export figures once again returning to pre-war levels, confidence among freight sources in the continuation of the corridor means that freight rates have also come down to more normal levels.

Even with the war-risk premium still in force, Ukraine’s exports now price around $6-7 per tonne above the EU price for Panamax vessels and $4-5 per tonne for Handy-sized, compared with the levels seen from the EU Black Sea ports into the same destinations.

Wheat exports grew the most

In terms of the commodities being exported, wheat showed the most significant growth at 9%, amounting to 1.5 million tonnes compared with last year, and taking the total to 18.4 million tonnes, with the country’s reach again becoming truly global.

That export figure was slightly above the USDA’s forecast, which was for 18.1 million tonnes for the 2023-24 marketing year, while the country’s wheat production reached 21.6 million tonnes in 2023-24, according to the latest data from Ukraine’s statistics agency, Ukrstat.

Spain overtook Turkey to become the main importer of Ukrainian wheat in the 2023-24 marketing year, taking 5.9 million tonnes – a factor that was driven by more than the country’s export capacity.

Two primary reasons came into play, with Ukraine producing more feed wheat to boost availability and make the wheat relatively cheap compared with corn, along with Ukraine being the most competitive option for Spanish destinations for long periods during the year.

Egypt also overtook Turkey to take the number two spot, doubling its purchases to 1.72 million tonnes.

Increases in shipments were also reported for other African destinations, with Algeria’s imports rising threefold to 588,500 tonnes, Tunisia’s buying up by 79% to 444,800 tonnes, and Morocco resuming imports after a pause during 2022-23. Morocco imported 144,900 tonnes over the year.

The reopening of the country’s Black Sea ports allowed Ukraine to increase shipments to Asian destinations as well, with around 4.3 million tonnes traveling long haul. This was more than double the volume last year of 1.9 million tonnes.

Pakistan resumed imports, with 814,000 tonnes heading there, while Indonesia increased its purchases by a factor of more than three to reach 1.5 million tonnes, making it the third-biggest importer.

Vietnamese imports also significantly improved, with an increase of nearly 4 times to 683,000 tonnes imported, compared with only 178,400 tonnes in 2022-23.

South Korean buyers increased their purchases to 240,600 tonnes, despite buy tenders for the country still explicitly ruling out Ukraine-origin wheat.

The Philippines resumed imports as well, with 86,400 tonnes imported – although the figure was still well below pre-war levels.

Top importers of Ukrainian grains changed hands

For Turkey and Romania, respectively Ukraine’s first and second biggest customers in the 2022-23 marketing year, the countries both lost position – with Turkey losing a position it had only gained as a result of the Black Sea grain initiative.

With only slightly more than 1 million tonnes imported through the year, Turkey slipped down the order, while Romania’s position was entirely predicated on the ability to re-export Ukrainian corn via Romanian ports.

Consequently, with the re-opening of the Great Odesa ports, wheat exports to the country dropped by 62% to 1 million tonnes.

Falls were also seen in wheat exports to neighboring countries, because the re-opening of the humanitarian corridor meant that alternate export routes carried less significance than they had during the continuing blockade of exports from Ukraine’s ports.

As a result, wheat imports into Poland fell to just 1,100 tonnes, from 899,500 tonnes last year, while Hungary’s imports were zero, down from 290,400 tonnes in 2022-23.

Slovakia imported just 5,100 tonnes, compared with 131,800 tonnes last year.

Barley export dropped

Barley exports declined by 221,000 tonnes compared with the previous year, to a total of 2.5 million tonnes amid lower production in the country.

But the figure was still 200,000 tonnes above the USDA’s 2023-24 projection at 2.3 million tonnes, while production in the 2023-24 marketing year was 5.5 million tonnes, according to Ukrstat. This meant that around half of the total production was exported.

The main destination for Ukraine’s barley exports in the 2023-24 marketing year remained China, which doubled to 701,500 tonnes – although the figure was still well below the pre-war level of 2.6 million tonnes.

Spain remained the second-biggest destination for a second year with imports at 460,100 tonnes, and Saudi Arabia resumed imports from Ukraine, with the total figure reaching 131,500 tonnes.

Meanwhile, as with wheat, imports of barley by Romania dropped by 64% to 211,900 tonnes, amid a normalization in the movement of Ukrainian volumes out of the Black Sea.

Corn export remain at similar levels

Finally, corn exports during the period from July 2023 to June 30, 2024, reached 29.3 million tonnes, largely in line with last year’s results at the same stage.

The marketing year for corn typically starts in September, meaning that these figures do not reflect the typical marketing year and the final 2023-24 export data has yet to be received.

It also means that, for the first few months of the marketing year under consideration, corn exports will be slower because they are coming from old crop supply.

Corn production in 2023-24 reached 31 million tonnes, however, according to Ukrstat.

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