Black Sea Region: Russia, Ukraine, Kazakhstan set up grain export restrictions

Russia has an export quota that limits its total grain exports to countries outside of the Eurasian
Economic Union (EAEU) to a total of 7 million tons for wheat, corn, barley, and rye through June 2020, USDA reported on April 8.

Russia has exported over 28 million tons of wheat to date3 and is expected to export about 5 million tons during the quota period. With corn, barley, and rye exports projected at approximately 2 million tons during this period, total projected grain exports will not exceed the established quota.

Ukraine has established a wheat grain export quota for the current trade year of 20.2 million tons. To date, Ukraine has exported approximately 18 million tons of wheat. USDA’s forecast of 20.5 million tons, which includes wheat flour, leaves approximately 2.5 million tons for exports in the remaining 3 months of the year.

Kazakhstan had initially established an export ban on wheat flour but quickly cancelled the ban and imposed a monthly export quota. Beginning this month, Kazakhstan will allow a maximum monthly quota of 200,000 tons of wheat and 70,000 tons of wheat flour for export.

Despite these export restrictions, USDA’s forecasts for Ukraine and Kazakhstan remain unchanged due to faster-than-average pace of exports during the first 3 quarters of 2019/20 which are offset by slower-than-anticipated export volumes during the final quarter. Russia’s exports are lowered on slower pace over recent months and reduced trade anticipated in the fourth quarter. Conversely, EU wheat has become price competitive with ample supplies leading to a massive surge in exports to date. The European Union is expected to continue its higher-than-average exports in the final quarter, on par with Russia as the top global wheat exporter. Optimism for the end of its 3-year drought has another major supplier, Australia, dipping into its stocks with greater-than-anticipated exports.

Russia and Ukraine are major exporters to price-sensitive markets such as Indonesia, Egypt, Bangladesh, and Turkey, which are easily able to shift to other suppliers. Indonesia, the world’s second-largest importer, has diversified its suppliers and can easily shift imports to a variety of other exporters such as Australia, which was historically its largest supplier. Egypt, the largest wheat importer globally, sources most of its supplies from Russia and Ukraine, but also imports from the European Union when prices are competitive. Similarly, Bangladesh imports mostly from Russia and Ukraine but also sources from a variety of other exporters, such as the United States and Canada. Turkey is also a major importer of Russian wheat. Its exuberant import pace during the first 3 quarters has boosted its stocks and fuelled its flour exports.

As a landlocked country, Kazakhstan has become a major supplier to the region, particularly to Uzbekistan, Afghanistan, and Tajikistan, which rely heavily on Kazakh wheat and wheat flour. With Kazakhstan’s monthly export volume restricted to 200,000 tons in wheat (grain) and
70,000 tons in flour, these markets could face a potential shortage and will have to look to nearby suppliers such as Turkey for flour and the European Union for wheat. Imports for Uzbekistan and Tajikistan are revised down on slower pace to date and potential trade restrictions imposed by
Kazakhstan.

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