World: Trade of physical grains almost at standstill following Russia’s invasion of Ukraine

The Russian invasion of Ukraine has shocked financial, stock and commercial markets all over the world. Trading of physical grains has almost come to a standstill. One immediate consequence of the war is the suspended shipments of grain, oilseed and vegetable oil from the Black Sea, hurting particularly countries with large import needs, China, the Mediterranean and Mideast, H. M. Gauger GmbH said in their March report.

Ukraine loses its export business and quite possibly this year’s crop. In 2021/22 the country produced 84 mln tonnes of grains. Its exports would have added up to 64 mln tonnes, 14.2% of the world trade. Barley sales would have totalled 5.85 mln tonnes, 15.8% of all world exports. But now there is warfare inside the country, and all ports are blocked from export shipments.

The countryside of Russia is not affected to-date, but navigation on the Black and Azov Sea has come to a standstill. Financial sanctions on Russia may fully shut down trade with Russia.

Russia and Ukraine together represent 25% of the world grain surplus. If their participation in world markets is sharply reduced in the future, world S&Ds look desperately tight, quite different from the pre-war figures. Food inflation everywhere and famines in the poor parts of the world will be aggravated, the analysts said.

A good outcome of the 2022/23 crop is absolutely necessary to avoid a food disaster in the world. Soil and planting conditions in Europe from the Pyrenees to the Urals and Siberia look good. In parts of the U.S. Plains and the Canadian Prairies precipitation is reported, but a serious drought risk remains. Maize and bean crops in Argentina and Brazil have suffered from drought, their formerly optimistic crop forecasts have been slashed in recent weeks.

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