Ukrainian grain exports slump in March, expected to further slow down this year.

Ukrainian grain exports decreased in March and are expected to further slow down this year amid lower supply and smaller harvest predictions.

Grain exports amounted to 5.2 million metric tons in March, down from 5.8 million metric tons the month before, according to various estimates.

After Kyiv set up its own corridor in the Black Sea following Russia’s withdrawal from the U.N.-brokered Black Sea Grain Initiative in July 2023, shippers rushed to get grain to market, leading to higher export volumes in recent months. The larger volumes were also due to large backlogs of grain traders had to sell, including from a record-high harvest in 2021.

In December 2023 and January of this year, grain exports hit 5.3 million metric tons and 5.4 million metric tons respectively.

Grain exports could reach 6 million metric tons in April — Ukraine has already exported over 3 million tons by mid-month, according to the Agriculture Ministry. However, the March decrease is a harbinger for a further slowdown this year as traders have sold off what was left and a lower harvest is predicted for the coming season.

“We are very likely to see a substantial slowdown in exports very soon because the country exported everything that it could,” Andrey Sizov, managing editor of the Sizov Report that monitors Black Sea grain markets, told the Kyiv Independent.

As of April 17, the volume of exports since the start of the marketing season, which started in July 2023 and ends in June 2024, had amounted to 38.6 million metric tons, the ministry reported, meaning over 80% of the projected grain has already been exported. With leftover stocks also sold off, grain supply is shrinking.

Lower export levels ultimately mean less hard currency for the country at a time when its economy is struggling as Russia’s war continues into its second year. As one of the main grain exporters in the world, Ukraine’s food products are crucial for global food security.

“(The situation) is obviously very serious — food exports in 2023 accounted for around two-thirds of Ukrainian global exports and taking into account that the country badly needs hard currency and grain exports are a very important source of hard currency, (the situation is) not good for the Ukrainian economy.”

Russia’s ongoing attacks on Ukraine’s port infrastructure, while less intense than last fall when Moscow repeatedly launched missile attacks at both Black Sea and Danube River ports, also contributed to lower grain exports in March. A recent attack on Odesa damaged port infrastructure, further threatening grain exports.

Meanwhile, prices for wheat remain low globally and Ukrainian producers are slowing down grain sales as they wait for the prices to rise. Wheat prices around the world have dropped to four-year lows due to oversupply and high market competition.

The decline in grain exports can also be attributed to decreasing wheat shipments and rising corn exports, according to the Ukrainian Agribusiness Club (UCAB).

“As Ukraine's own sea route has been established, primarily exporting larger volumes of wheat in line with demand, the time has now come for corn,” Svitlana Lytvyn, head of the analytical department at UCAB, told the Kyiv Independent in a written comment.

Corn exports totaled 3.1 million tons in March, up from 2.9 million metric tons in February, according to Agriculture Ministry data.

At the same time, Ukraine’s harvest for 2024 is also expected to be around 74 million metric tons, the Agriculture Ministry said on April 17, which is around 10% lower than the previous year. Last year’s harvest amounted to 82 million tons in 2023 thanks to better-than-predicted weather.

The ministry predicts that the harvest will produce around 52.4 million metric tons of grain, and 21.7 million tons of oilseeds. For comparison, last year’s harvest included 60 million tons of grain and 22 million metric tons of oil seeds.

This year’s lower forecast is the result of both a decrease in areas sown and lower yields, according to Lytvyn. Ukrainian producers have also been less likely to sow grain crops and more likely to grow oilseeds, such as sunflower and rapeseed, as they are more profitable than grain.

This trend is likely to continue in 2024, Lytvyn says, as the current conditions in Ukraine for growing oilseeds are minimally profitable, while growing grain remains unprofitable.

While positive weather conditions allowed for record yields in wheat, barley, and corn last year, Ukraine typically doesn’t experience two good years of favorable weather conditions in a row, according to Lytvyn. As last year’s weather was extremely favorable, it’s unlikely this year will be.

Ukrainian producers are also facing losses for the second year in a row. To cut costs in the face of a lack of financing, they are using fewer fertilizers and crop protection measures and sowing smaller areas, which will invariably result in lower yields.

“If the sown area under all crops decreases in the coming years, the damage will be significant for both farmers and the Ukrainian economy as a whole due to a decrease in cash flows,” Lytvyn said.

“Unfortunately, this scenario is quite likely."