World Grain - April 2022 - 30

FEATURE: WAR THREATENS GRAIN TRADE, FOOD SECURITY
" Preparatory work is starting now but with a high
probability that many agricultural producers will face
problems and the export season will most likely be a
failure, " Bodrova said.
The current situation is likely to push the largest
wheat suppliers to expand production, especially if the
global prices would keep setting new records. Farmers
in neighboring countries also are likely to ramp up
wheat production to replace the withdrawn quantities.
" I presume other countries will be thinking about
this and will look to fill the gap, " Lee said. " Most
Kazakhstani wheat is spring planted. I expect they will
plant more. I'm not sure of the winter wheat spring
wheat split in Poland, but there is no agronomic reason
why they couldn't increase spring wheat hectares. I expect
they will also increase corn hectares. "
It seems that Putin will
be satisfied if there is
an absolute void on the
territory of Ukraine.
Roman Slaston, director general,
Association Ukrainian Agribusiness Club.
Slaston noted that " diesel fuel is critically needed
since it is sorely lacking. Most of the previous supplies
were from Belarus and the Russian Federation,
and only a part was from European countries. We are
now completely cut off from the sea, so supplies can
only be brought in by land from the EU countries, and
these supplies are limited. Now, all imported volumes
of diesel fuel go to the needs of the army. "
A troubling post-war reality
A big question is what will the long-term consequences
of the conflict look like? Ukraine and Russia account
for about 30% of the world's traded wheat, and no scenario
is looking good for the world market.
As for the long-term consequences, everything will
depend on the scale of the destruction.
" We now see that the Russian troops are becoming
more and more aggressive, " Slaston said. " They
start shooting directly at civil buildings, even in ordinary
villages where there are no resistance or military
forces of Ukraine, they shoot at buildings, start robbing
households, taking away chickens, milk, food.
" Today we received information that a shell hit the
building with fertilizers. This is also a loss in terms of
infrastructure and opportunities for Ukraine. Therefore,
everything will depend on the final destruction that
Russia will inflict on Ukraine. "
30
A lot will depend on which side prevails in the conflict.
A Russian victory in Ukraine could complicate
things even further.
" I would say it is too early to comment on a Russian
victory or under whose jurisdiction and export policies
the grain would be traded under, " Bolesworth said.
" This uncertainty is adding a considerable risk premium
to prices. "
Lee added: " I'm not sure what 'victory' would look
like but to be able to sell grain you need a buyer, and
I can see a 'victory' whereby sanctions restrict trade
from the Black Sea - Russia and Ukraine. Clearly,
there isn't the capacity to just replace 30% of global
wheat exports from other sources, hence, why I say
sanctions would restrict trade, as in it would be limited
and with caveats attached. This would be a tectonic
shift in the grain trade, but I don't think the global
community would tolerate a world where (Russian
President Vladimir) Putin is in control of a third of the
world's wheat exports. "
Some analysts believe that by taking over Ukraine,
Russia can start using grain as a weapon more extensively.
A group of experts recently told Politico that
Russia already has cut off critical grain supplies to
countries that have hitherto relied on Ukrainian exports.
" With one of its well-documented false narrative
campaigns, Russia will likely focus on selling to those
states the notion that this increase in hardship is the
fault of the West, " the experts told the publication. " In
exchange for recognition of Russian claims to Ukraine
and potentially elsewhere, the Kremlin would be willing
to relieve that tension by providing the necessary
grain. "
The experts added Russia may soon be in a position
to decide not only who receives critical food
supplies, but who does not. The resulting strategic
gains for Russia could also mean deliberately creating
targeted food security crises in some of the
world's most fragile states and regions. With countries
such as Yemen, Libya, Lebanon, Sri Lanka,
and Sudan - among others - heavily reliant on
Ukrainian grain, even a short-term delay in supply
may have drastic consequences.
Slaston said it is difficult to identify Putin's primary
goal, but in his opinion the Russian invasion of Ukraine
stems from mainly military and geopolitical motives -
" the desire to resurrect the Russian empire. "
" It seems that Putin will be satisfied if there is an
absolute void on the territory of Ukraine, " Slaston said.
" Even the shelling of nuclear power plants also speaks
of the Russian dictator's not quite sane mind. "
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April 2022 / World Grain / World-Grain.com
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World Grain - April 2022

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