LONDON, ENGLAND – With Ukrainian farmers — at least those who haven’t fled the country or joined the army to fight the invading Russian military — expected to plant about half as much wheat and corn this spring compared to a year ago, countries that traditionally have depended on Ukrainian wheat are seeking alternate suppliers.
Emerging as an unlikely candidate to help fill the supply gap is India, which is about to harvest what is expected to be its sixth straight bumper wheat crop, giving it an unprecedented surplus of the world’s second most consumed food grain.
“By the end of March, India will have more than 24 million tonnes (of wheat) in reserves,” said Alexander Karavaytsev, a senior economist with the International Grains Council (IGC) and one of several IGC analysts who spoke about the Russia-Ukraine conflict’s impact on global grain markets during an online press conference on March 24. “That’s more than 17 million tonnes higher than the country’s reserve requirement for April 1. It doesn’t mean that all the excess volume will be shipped, it just means that for next season it may impact what the government decides to do.”
Among the countries that may seek to replace Ukrainian wheat with shipments from India are nearby Bangladesh and Indonesia, Karavaytsev said, noting that freight rates would be cheaper from India to any of the Asian destinations that typically import wheat from Ukraine.
“The quality of Indian wheat has improved, and some varieties are even suitable for producing pizza dough and pasta,” Karavaytsev said. “Having said that, looking at the shipping capacity from India, we think the volume available for shipment will depend on the government procurement target for the upcoming season, and also domestic shipping capacity and the cost of shipping from the provinces to ports.”
India, which typically ranks second to China in annual wheat production but accounts for less than 1% of exports, has in recent months made large deliveries of milling wheat to Bangladesh, Indonesia, the Philippines and the United Arab Emirates. It also has exported feed wheat to South Korea and Thailand, the IGC said.
The Council added that India is reported to be in final talks to start exports to Egypt, with ongoing discussions taking place with Turkey, China, Sudan, Nigeria and Iran.
Others are looking to the European Union to fill the void, Karavaytsev said, particularly countries in North Africa and the Middle East.
“Germany and France still have supplies to ship, and Romania as well for the end of season,” he said.
Ukraine and Russia account for about 30% of wheat exports in a typical year. Roman Leshchenko, Ukraine minister of agriculture, on March 22 told Reuters 6.5 million hectares of winter wheat were planted last fall but projects that only 4 million hectares will be harvested due to the war. As for the planting of spring wheat and other row crops, he anticipated farmers would only sow 7 million hectares, far below the previous estimate of 15 million hectares.
Also impacted by the military battle, now more than a month old with seemingly no end in sight, are corn exports. Ukraine accounts for about 20% of the world’s corn shipments and likely will fall well short of that mark this year, with Leshchenko estimating 3.3 million planted hectares this year compared with 5.4 million in 2021.
With South American crops diminished by drought, importers likely will look to the United States, the world’s No. 1 corn producer and exporter, to shoulder even more of the load, said Miriam Morath, an IGC economist.
“The question is who can fill the gap? In the short term, there only seems to be the United States to do this on a large scale,” Morath said.
She said India could potentially export more corn “but mostly to regional markets.”
Partly due to lower imports from China, global corn trade is set to contract by 8% from the previous year in the 2021-22 marketing year. Morath described the prospect for exports in the 2022-23 marketing year as “highly uncertain” due to the war in Ukraine. Not only is the planting season being interrupted in parts of the country, its major ports also have been shut down.As for the war’s impact on Russia’s grain exports, wheat shipments in March have held at a near-normal pace, but analysts recently toldBloomberg that few new deals are being signed as severe economic sanctions levied against Russia by the United States and its NATO allies are starting to have an impact.