FACTBOX: Black Sea grains trade sees shift amid potential Russia-Ukraine peace deal

The Russia-Ukraine war, which started in February 2022, significantly disrupted Black Sea grain supplies, primarily impacting Ukraine's exports and raising global food security concerns. In the three years of the war, Russia's share of global grain exports has increased while Ukraine's has declined.

Ukraine's grain exports did benefit from the Black Sea Grain Initiative, but it was short-lived after the deal ended in July 2023. Ukraine now has its own Black Sea corridor that started in August 2023, but grain exports from the country are yet to reach pre-war levels.

Now any attack on Black Sea ports, ships, and infrastructure is treated as just "another one" for Ukrainians.

"The market has long since stopped reacting to what has become the normal level of attacks in and around the Black Sea. Port strikes, and even ship strikes, rarely have any effect on markets. Even farmers, sailors and ship owners generally don't react very much to attacks," a Ukraine-based trade source said.

Amid this ongoing war, most market participants said they do not see any short-term Russia-Ukraine ceasefire impacting market dynamics.

Here's a look at the changing agriculture trade patterns in the Black Sea after three years of war.

Wheat

Trade

• According to the Food and Agriculture Organization of the United Nations, Russia and Ukraine held a combined market share of 34% of wheat over the 2019-2021 period.
• In 2022, Russia-Ukraine's combined share in the global exports of wheat declined to around 17% from about 26% in 2021, according to FAO.
• Russia's wheat exports increased to 55.4 million mt in marketing year 2023-24 (July-June). Its world wheat market share grew to 28% from 26% in the previous year, according to Rusagrotrans analytical center.
• Russian wheat shipments amounted to 34.2 million mt for the first eight months of MY 2024-25 (July-February), according to Rusagrotrans.
• S&P Global Commodity Insights analysts see Russia's wheat exports at 44 million mt in MY 2024-25, down from 54.7 million mt in MY 2023-24.
• Commodity Insights analysts anticipate a decline in the Russian wheat export pace and a reduction in the export forecast due to the export quota effective from Feb. 15, low stocks, and concerns over new winter crops.
• Ukraine wheat exports reached 18.4 million mt of wheat in MY 2023-24 (July-June), a 9% increase year over year, according to Ukraine's agriculture ministry.
• In MY 2024-25, Ukraine shipped 12.5 million mt of wheat as of March 17, down 4% year over year, according to Ukraine's agriculture ministry data.
• Commodity Insights analysts project Ukraine's wheat exports at 15.6 million mt in MY 2024-25, down from last year's estimate of 18.6 million mt.
• With war-related uncertainties, USDA's long-term projections indicated that Ukraine's grain exports will not have recovered to pre-war levels before the end of the coming decade.

Infrastructure

• Russia produced a record 91.5 million mt of wheat in MY 2023-24, while Ukraine produced 23 million mt wheat, according to the US Department of Agriculture data.
• Commodity Insights analysts project Russia's MY 2024-25 wheat harvest at 81.6 million mt, down 10% from last year. This year, the Russian wheat crop faced weather challenges such as frost and drought, resulting in crop failures and lower harvests.
• Commodity Insights analysts project Ukraine's MY 2024-25 wheat production at 22.4 million mt, down from 23 million mt in the previous year.
• Russia's MY 2025-26 wheat crop would be 87.5 million mt while Ukraine's output may reach 22.1 million mt as winter crops maintain overall good condition, Commodity Insights analysts projected.

Prices

• Black Sea wheat prices are under pressure due to slow demand as buyers turn cautious, anticipating further price declines to offset the increases seen since the start of the year, Platts reported.
• Platts, part of S&P Global Commodity Insights, assessed Russian 12.5% wheat FOB Black Sea at $253/mt March 18.
• Platts assessed Ukraine 11.5% wheat FOB Black Sea at $244/mt March 18.

Corn

Trade

• Ukraine's corn exports were 29.5 million mt in MY 2023-24, a slight increase from the previous year. Ukraine retained its position as a major corn exporter, though its market share decreased slightly.
• Due to lower corn production last season, Commodity Insights analysts forecast Ukraine corn exports to reach 22 million mt in MY 2024-25.
• Commodity Insights analysts forecast that the country's corn exports in MY 2025-26 may reach 26 million mt.

Infrastructure

• Ukraine's corn production was 32.5 million mt in MY 2023-24, up 20% year over year, according to USDA data.
• Commodity Insights analysts project Ukraine's corn production at 25 million mt in MY 2024-25.
• Crop failures due to extreme drought resulted in lower corn output in MY 2024-25.
• In MY 2025-26, Ukraine's corn output may reach 30.4 million mt, Commodity Insights analysts forecast.

Prices

• Black Sea corn prices with FOB values have hit a two-year high level on active export demand, coupled with limited supply from farmers and heightened competitiveness in destination markets.
• Platts assessed Ukraine corn prices FOB Black Sea at $236/mt March 18. The same levels were seen in March 24, 2023.
• May corn futures on the Chicago Board of Exchange fell by 2.4% to $181.5/mt in a week, losing 11.7% in a month on expectations of tariffs on Mexico, which, on the other hand, contributes to an increase in Ukrainian corn exports.

Sunflower oil

Trade

• Russia and Ukraine are the world's largest exporters of sunflower oil, holding a significant share in global exports.
• Ukraine already exported 2.98 million mt of sunflower oil in MY 2024-25 until February, down from 3.95 million mt in the corresponding period last year.
• Ukraine's sunflower oil exports are seen reaching 5.7 million mt in MY 2024-25 while Russia's exports would reach 5.5 million mt, local analysts estimated.

Infrastructure

• The USDA projected higher sunflower production in the Black Sea region in MY 2024-25.
• Russia's sunflower oil production is projected at 6.7 million mt in MY 2024-25 and Ukraine's at 5.61 million mt in MY 2024-25.

Prices

• Ukraine's sunflower oil prices are at the levels last seen in October 2022.
• Platts assessed Ukraine sunflower oil prices FOB Black Sea at $1,140/mt March 18. Farmers continue to restrain sales which supports sunflower oil prices.