A Disrupted Maize Market

Russia’s invasion of Ukraine has strongly impacted the food maize market during the past few weeks. Ukraine alone accounts for over 15 percent of the world’s corn exports, which will typically supply not only major consumers such as the EU and China, but also the Mediterranean countries. On average, 80 percent of Ukraine’s production is exported. The actual amount that percentage translates into (a figure that is valid both for current season and before the war) is around 33 million tons. When the invasion started, Ukraine’s remaining available maize export supply was almost 16 million tons (planned to be exported by the end of the current season – in June 2022), of which 5 million tons were for the EU.

The country’s logistics has been severely affected and redirected towards the war effort. Its export ports have been damaged by the Russian bombings, blocked by the Russian fleet, and mined by the Ukrainians in order to prevent amphibious maneuvres. As a result of that, Ukcraine has exported maize through its western regions, to its European neighbours (Poland, Romania, the Baltic countries and others), by road and rail. However, these transport alternatives remain limited, the country’s current exports being estimated at no more than 200 000 tons a week.

The virtual absence of this major market player at the end of the season has caused a strong price spike. As a result, many importing countries have turned to other sources in order to meet their internal demand. Such is the case of the EU, where importers have first looked for any – albeit limited – amounts in the neighbouring countries with a surplus, before turning to the US corn. It is also China’s case – for which Ukraine used to be an important supplier – and which has now returned to the US corn contracts.

Tensions Expected to Continue in 2022/23

The current tensions should continue at least at the same level in the next production season. Ukraine’s 2022 maize plantings have been made very difficult by the current situation. The country’s farmers lack all types of inputs: fuel, seeds, crop protection products, etc, as part of the labour has been conscripted and some of the areas have become impossible, mostly because of landmines. The Ukrainian government and analysts therefore estimate that the country’s maize area will drop by 30 to 40 percent compared to 2021. Moreover, crops will be difficult to export this autumn even if the conflict ceases, because of the damaged infrastructures.

Otherwise, the war in the Ukraine has triggered an input price rise in the other countries, for all crops. Russia – whose economy has been sanctioned – is a major gas, petrol, and fertiliser exporter, and the current situation has caused additional increases in the prices of fuel, fertilisers, and other inputs.

Against this tense background, the other major exporters (the U.S., Brazil, and Argentina) will continue to be approached in the attempt to at least partly offset the absence of Ukrainian maize. This will make the market even more sensitive to unpredictable weather conditions in the next season, as the U.S. maize areas are estimated down sharply in favour of soybeans this year, and drought starts posing a serious threat to the safrinha maize in Brazil, which that country should start exporting in July.

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