US wheat field rain

This article will look at the impacts of the war in Ukraine on production and export potential. The information is from Masha Belikova, a Ukrainian market analyst and Mike Lee, a UK analyst who specialises in Black Sea production.

While much of the market’s focus has been on the impact of severed supply routes and access to one of the world’s major exporters, the cost to the winter crop and yet to be sown summer crops, is still being assessed.

Upwards of 98% of the country’s wheat and rapeseed (canola) are winter varieties and sown last Sept/Oct.  These will emerge from dormancy over the next couple of weeks – which this year is delayed due to a prolonged cold spell.  The winter wheat areas are concentrated in the southern and eastern part of the country with another swathe of country near the port city of Odessa in the west. 

An overlay of the winter cropping areas and the conflict zones suggest that 43% of the crop is in contested territory.   Ukrainian farmers will have resourced much of their inputs prior to the conflict escalating, however the logistics of field operations in a war zone, especially diesel supply, could see reduced paddock activity. 

Pre-war, Mike Lee (Green Square Consulting) estimated wheat production at 27mmt.  In the event that only some of the fertiliser and crop protection inputs could be applied, this would see production drop (in the conflict zone) to 70% of potential.  If the war were to drag on, impacting harvest activity, it is possible that production could drop to 60% of potential or 16mmt.  Domestic consumption is around 7mmt.

The spring sown barley, sunflower and corn crop is even more in the spotlight.  While much of the seed and crop protection inputs have been sourced, most of the fertiliser would normally have been imported from Russia or Belarus.  Diesel remains in short supply and you can only imagine the logistics of getting spare parts and labour.

Spring barley accounts for 50% of the total barley area and can be sown towards the end of March.  Sunflower, corn and soybeans will be sown towards the end of April –  so there is still time to manage the logistics of getting those crops in the ground if war were to stop soon. However, should the conflict drag on, 43% of the country’s sunflower cropping area and 36% of the corn area is in active conflict, potentially having a devastating impact on the ability to get the crop in.

The focus for Ukraine will be to make sure they can harvest enough to meet domestic demand.  The export program for the 2021 season was largely front ended, so Ukraine had executed much of their export business before the invasion.  Some 6mmt of wheat remains to be exported.  Some exports are still being made via rail through Poland, but at a maximum of 20kmt a day, this supply chain is much slower.

What does it mean?

Russian strategy appears to have changed gear.  Instead of the ‘blitzkrieg’ Putin had hoped would sweep away resistance, the Russians appear to now be waging a war of attrition.  If this is the case, it poses a significant risk to the spring plant in Ukraine and therefore ensures the risk premium stays embedded in the wheat market (as well as corn, canola and barley).

Have any questions or comments?

We love to hear from you!

Print This Post

Key Points

  • Around 43% of Ukraines winter cropping area appears to be in the conflict zone.
  • Spring barley accounts for 50% of the total barley area and can be sown towards the end of March.
  • The logistics of field operations in a war zone, especially diesel supply, could see reduced paddock activity

Click on figure to expand

Click on figure to expand

Click on figure to expand

Click on figure to expand

Data sources: USDA, Agricensus, Green Square Consulting

Make decisions with confidence- ask about our board packs, bespoke forecasting and risk management services

Have any questions or comments?

We love to hear from you!
Grains & Oilseeds

Why are diesel prices smoking?

Australian diesel prices for farmers have reached their highest levels on record recently, but what has been the cause, and will the situation improve anytime

Read More »
round hay bales
Grains & Oilseeds

Demand dry in the hay market

Feed demand and hence prices can be looked at as a solid indicator of pastoral conditions, producer intentions, and of course availability. QLD hay prices

Read More »
Australian wheat shipping terminal
Grains & Oilseeds

The sharks are circling

It was a bloodbath in the agricultural commodities last night, indeed the whole week. Since last Friday, Dec ’22 wheat has lost 139¢/bu or $62/t

Read More »
Percentiles with a background image of hay bales

Percentiles – June 2022

Mecardo’s Percentiles update for June 2022. Click below to view the latest report Grains Oilseeds Sheep and lambs Cattle Wool Dairy Fuel Percentiles are an important

Read More »

Don’t have an account with us? Join free.

You can have full premium access to all of our content with a monthly or annual subscription. 

Alternatively, create a free account to access our Insights blog and two free premium article a month!

Independent analysis and outlook for wool, livestock and grain markets delivered to you as it’s published

Commodity conversations podcast cover image, a illustration of a sheep standing on a cow's back with grain either side
Listen to the podcast

Join the Mecardo team for the Commodity Conversations podcast, where we provide short weekly market recaps and longer conversations with guests to discuss the drivers and trends in livestock, grain and fibre markets.

Photo of a farmer surrounded by Merino sheep in dusty yards
Research: Analysis of the Australian sheep flock

In this report for LiveCorp and MLA, we analysed the historical trends in the demographics of the Australian sheep flock, examining domestic factors that influence farm-level enterprise decision making. 

Image of harvested grain pouring into a chaser bin

We don’t just bring you the most up to date market insights. Find out more about Mecardo’s services including risk management advisory, modelling, benchmarking, research & consultancy.