The Russians block Ukraine's access to the sea
13:53
The Russian aggression against Ukraine poses a high risk of a supply shock on the food market, PKO BP analysts believe. Ukraine's access to the Black Sea has been blocked, and it is trading by the sea that is crucial for this country.
Ukraine is one of the largest exporters of corn and wheat in the world. Russia, on the other hand, exports the most wheat of all countries. Together, these two countries account for over a quarter of the world trade in wheat and nearly a third of the global trade in barley, say analysts from PKO BP.
"A significant part of the cereals that were intended for export to Ukraine in the 2021/22 season has already been exported. Nevertheless, several million tonnes of wheat and probably (taking into account the record harvest in 2021 in Ukraine) several million tons of corn that could be exported by the end of this season, stuck in the Ukrainian market,” PKO BP analysts wrote in the report.
The US Department of Agriculture (USDA) lowered its forecasts for wheat exports from Ukraine and Russia for the current season by a total of 7 million tonnes compared to February forecasts. In terms of corn export forecasts, the USDA predicts that Ukraine will export 6 million tonnes less this year. This is 3.4 and 3 percent of all global exports of these products forecast for the current season respectively. The unavailability of this volume means a short-term negative supply shock on the food market, which will result in keeping prices at a high level.
