How important is Ukraine to global agriculture and commodity markets?

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To get a clearer picture of Ukraine’s impact on global agriculture and commodity markets, I’ve put together the key facts and figures below.

context

Where is Ukraine?

Eastern Poland and Romania, Southern and Western Russia, Northern Black Sea

How far north is Ukraine?

Its southern border is roughly the same latitude as Duluth, Minnesota. Its northern border would be about 100 miles north of Winnipeg.

How big is Ukraine?

Ukraine is about the same size as Illinois, Iowa, and Missouri combined. It’s about the size of Texas.

How long is the growing season in Ukraine?

It’s similar to Fargo, ND, but they start planting earlier and harvesting earlier. In February, they should be an accompaniment to wheat. At the end of March, they will start sowing maize.

How much wheat and corn do they grow? How much do they export?

Compare them to some states in North America. The USDA does not break down exports by state, but here is my estimate.

Corn (in billions of bushels)

Region

Production

Export

% of production exported

Ukraine

1.6

1.3

81%

Minnesota

1.4

0.25

18%

Iowa

2.58

0.46

18%

we

15.1

2.7

18%

In other words, Ukraine exports about double what Minnesota and Iowa combined probably export. That means planting problems in Ukraine would have a bigger impact on exports than problems in Minnesota or Iowa.

Wheat (in billions of bushels)

Region

Production

Export

% of production exported

Ukraine

1.2

0.880

73%

Kansas

0.32

0.118

37%

we

2.7

1

37%

Similarly, for wheat, Ukraine’s exports nearly equal total US wheat exports and eclipse Kansas’ production or export share.

How much does Ukraine have on the books (wheat and corn in cash) for sale that may not ship?

Again, these are estimated from different commercial sources:

  • Wheat: 220 million bushels. Most go to North Africa.

  • Corn: 550 million bushels. About 50% sold in China.

If it is not available in Ukraine, where will he get it?

  • Wheat: from Europe, India, Australia and the United States

  • Corn: Limited quantity from South America; most of the United States

The effects of a drop in grain production in Ukraine*

If Ukraine only produces half a crop of corn and wheat, what impact will that have on global ending stocks in the next marketing year?

If the wheat crop is reduced by 50% and domestic use remains the same, world wheat ending stocks will fall from 280 million metric tonnes to my estimate of 270 million metric tonnes. The world will not lack wheat.

If the corn harvest is reduced by 75% and domestic use remains the same, world corn ending stocks will fall from 300 million metric tons to my estimate of 260 million metric tons. The world will not lack corn.

The price is working, but we don’t see any evidence of price rationing – yet.

*Note: The above estimates are based on information available today. Traders around the world are actively trying to figure out exactly what those numbers are. State export estimates are my estimates since the USDA does not publish state-by-state exports.

What about other agricultural businesses in Ukraine?

A large publicly traded tractor and tractor and agricultural equipment dealer, Titan International, has 10 dealerships in Ukraine and employs 1,600 people. Titan said they will have to change their 2022 earnings outlook due to Ukraine sales uncertainty.

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