Trends in Ukrainian grain exports

While Ukraine’s grain exports have shown remarkable resilience since the Russian invasion, lower production and a winding down of elevated stocks may start to weigh on exports from the country in the coming years.

Since the end of the UN-controlled Black Sea Grain Initiative (BSGI) in July 2023, Ukraine has successfully shipped grain from the country’s Black Sea ports via its own corridor without the cooperation of Russia. While this has allowed the country to maintain deep-sea grain  exports, it has also contributed to a gradual depletion of stockpiles.

One result of limited export capacity and relatively high stockpiles over the past two years has been the flattening of seasonality in export volumes. Historically, Ukraine’s wheat exports rose sharply from July, in turn boosting vessel demand from the Black Sea and regional  geared vessel earnings. However, since the invasion in 2022, corn exports were prioritized, leading to altered wheat export seasonality.

This year, looking at the first quarter of the marketing year (July/June), it appears that wheat exports are returning to normal seasonal trends. Lower stockpiles  play a large part in this shift, as the availability of volumes for export is once again closely linked to the production cycle. However, the seasonality also depends on logistical constraints, notably the availability of vessels and  port infrastructure amid a recent increase of Russian attacks.

Ukraine’s corn production is forecasted 20% lower y-o-y by the IGC, a seven year low. However, as the EU also faces lower production, the region will likely continue to be the key destination for Ukrainian corn, a trade that was already up 10% y-o-y in 3q — boosting short-haul trade.

While China is the second largest market for Ukrainian corn, Chinese import demand is subdued amid high domestic stockpiles and an intentional attempt to lower imports. However,  growing appetite in India may act as a partial substitute. India is typically a regional exporter of corn, however, higher demand for feed and ethanol production has seen the country increasing imports. This has the potential to not only lift Indian demand, but also lift longer-haul shipments to regional destinations that were previously large receivers of Indian corn, namely Bangladesh, Vietnam and Nepal according to the IGC.

In the 12 months that the BSGI was in place, logistical bottlenecks were largely caused by the requirements for vessel inspections that limited the number of vessels able to transit the Bosphorus Strait and lengthened trip durations. The reduction in shipping bottlenecks as Ukraine initiated its own grain corridor has led to  greater use of the country’s Black Sea ports over other export avenues, benefitting from greater cost efficiency. Reflecting this, in the year-to-September, exports of barley, corn, soyabeans and wheat via vehicle and rail have fallen 71% and 52% to a respective 0.4 Mt and 0.2 Mt, Ukraine’s Ministry of Agriculture data show.

Hence, despite expected lower overall Ukrainian grain export volumes in the coming year, there remain some positives for dry bulk vessel demand. Shipments via ports are up 42%, and, at 9.6 Mt in 3q24, seaborne exports are nearly double the same period last year and 2.6 Mt above those of 2022, showing higher growth than total exports. Furthermore, fewer limits on Ukrainian ports have resulted in grain shipments doubling from Odessa to 10.2 Mt in Jan-Sept, while those from Romania’s Constanta have fallen 3.3 Mt to 14.2 Mt as Ukraine reduces its reliance on alternative shipping routes.

By Cara Hatton, Dry Bulk Analyst, Research.