World Grain - March 2022 - 10

NEWS REVIEW
Russian invasion rattles
markets, closes ports
KYIV, UKRAINE - Following Russia's military invasion of
Ukraine, commodity markets hit near-record highs and commercial
shipping was suspended from Ukrainian ports while
privately owned grain storage and processing facilities chose
to suspend operations for the safety of their employees.
Trade from the two Black Sea countries, which account
for almost 30% of global wheat and 19% of global corn exports,
pulled back or shut down entirely, impacting available
supplies.
Prior to the port shutdown on Feb. 24, a shipping vessel
chartered by Cargill, a multinational agribusiness based in the
United States, was struck by a missile as it was leaving a Black
Sea port on Ukraine's southern border. A Cargill spokesman
said the crew members were safe and accounted for and the
vessel remained " seaworthy " following the incident.
Cargill, which owns a majority stake in a deep-sea port near
Odessa and has more than 500 employees working in grain
and oilseed processing plants in Ukraine, said it temporarily
shut down its facilities to keep its employees safe.
Other multinational agricultural companies with facilities
in Ukraine also chose to suspend operations once the Russian
military started pushing into the country in the early morning
hours of Feb. 24.
US-based Archer Daniels Midland Co., which employs
more than 630 people in Ukraine and operates an oilseed
crushing plant in Chornomorsk, a grain terminal in the Port of
Odessa, five inland terminals, a river silo, and a trading office
in Kyiv, said safety was its top priority.
" Currently our facilities in Ukraine are not operating, following
security protocols and government guidelines, " said
Jackie Anderson, an ADM spokeswoman. " ADM will use the
full breadth of our global and integrated supply chain to support
the needs of our customers around the world as we manage
through this difficult situation. "
Also suspending operations in Ukraine were US-based
companies Bunge and CHS.
Bunge, which employs more than 1,000 workers in Ukraine,
said it closed company offices and temporarily suspended operations
at processing facilities in two cities in Ukraine. CHS
Inc., which employs 46 people in Ukraine, said it has been
reducing export activity in the country for the past few weeks.
Meanwhile, Russia, the world's largest wheat exporter, reportedly
kept its Black Sea ports open, but it did close the Port
of Azov on the Azov Sea to all commercial traffic. Most of
Russia's wheat exports go through the Black Sea ports.
Ukraine and Russia combine for about 30% of global wheat
exports and 20% of corn exports annually.
Still, it's premature to say that the invasion will cause a
change in grain flows, said economist Dan Basse, president of
AgResource Co., in an interview with World Grain. A lot will
depend on the duration of the fighting.
" Although I'd like to say we've got a change in world grain
trading order, which is what your knee jerk reaction would
be to this situation, we don't know yet, " Basse said on Feb.
24. " There's a lot of moveable pieces yet that have yet to
be decided. "
Ukraine exports about 5 million to 6 million tonnes of grain
per month, Reuters reported, including 4.5 million tonnes of
corn, 1 million tonnes of wheat and the rest barley.
This is traditionally a slow time in the Black Sea region,
with not much exporting going on ahead of summer harvest.
" If you ever wanted to have a more limited impact on world
grain trade, you would pick the months of March, April and
May, before we get into the bigger export market in wheat
starting off in late June and July, " Basse said.
" This is the time of year when the Black Sea is more normally
quiet, " he added.
If Putin set his sights beyond Ukraine into other former nations
of the Soviet Union, that would change the dynamics,
Basse said.
Another question is if Russia takes over Ukraine, will it apply
its existing duties and quotas to the Ukrainian grain?
" Will there be a duty or a quota? Those are questions that
are open at this point, " he said, adding that if the answer is
" yes, " it would pressure the Ukrainian market domestically
and raise some questions for large commercial grain companies
that have load-out facilities in the nation.
In the event of significant disruption, there will be opportunities
for other nations to supply wheat. It's likely everyone
would first turn to Europe, which is lagging far behind in
export pace and probably has an extra 4 million to 6 million
tonnes of wheat to push out, Basse said.
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March 2022 / World Grain / www.World-Grain.com

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