UKRAINE’s corn exports basically ground to a halt several weeks ago when Russia invaded the country, leading to the closure of its critical seaports.

       While that is causing a global supply crunch in the near term, it is also leading to an unprecedented buildup of stocks in the country.

       That could leave room for Ukraine’s upcoming corn harvest to fall well short of previous ones and still come up with very respectable exports over the next year.

       Some analysts believe Ukraine’s crop could be a near disaster, but the country’s own experts are much more optimistic.

       However, Ukraine’s exporting future is highly dependent on how long the conflict lasts and the short-and long-term impacts on its ports and infrastructure.

       That is anyone’s guess for now, though there is no indication from Moscow that the conflict is nearing an end.

       Ukraine ramped up corn production and exports massively within the last decade and the country now accounts for about 15% of global exports.

       It is considered one of the big four corn suppliers along with the United States, Brazil and Argentina.

       Almost all of Ukraine’s grain exports depart via the Black Sea, and ports there are currently occupied by Russian military.

       The country has been slowly exporting some grain by rail via the European Union, but the volume is only a fraction of normal and the potential is extremely limited.

       Before the war, Ukraine expected to export a record 33.8 million tonnes of corn in 2021-2022 following a bumper crop last fall.

       The agriculture ministry said last week that shipments could fall to just 17 million tonnes, which would be a six-year low. The marketing year runs to the end of June.

       The US Department of Agriculture (USDA) earlier this month was far more generous with its estimate for Ukraine’s 2021-22 corn exports at 23 million tonnes versus 33.5 million pegged in February.

       Since nearly 80% of the country’s annual crop is intended for export, this decline will cause a backlog in the country.

       The USDA hiked Ukraine’s 2021-2022 domestic corn use by a total of two-thirds over the last two updates to deal with the supply buildup.

       The use forecast of 13.2 million tonnes is already 20% over the previous record set eight years ago, so the feasibility and whether there is room for growth are both uncertain.

       Despite the aggressive consumption forecast, the USDA sees Ukraine’s corn ending stocks surging to 6.5 million tonnes, far above the record 1.6 million set a few years ago and the five-year average of just under 1.3 million.

       Although the USDA may need to make further export adjustments, its current numbers put Ukraine’s corn stocks-to-use at 18% in 2021-2022.

       Those levels have been seen before, but not since Ukraine became integral to world corn trade. That ratio has averaged 4.3% in the last five years, meaning Ukraine typically carries over very little supply relative to what it uses.

       Room for error?

       Beyond the immediate impact on corn exports, analysts have also been fixated on production potential for Ukraine’s summer corn crop that would supply its 2022-23 season. Farmers there should be ramping up planting now.

       Possible 2022 Ukrainian crop scenarios vary widely across the industry, but the country’s own ministry is perhaps the most optimistic on the situation.

       On Friday it pegged spring sowing area at 14 million ha, up from 13.4 million previously forecast but down from 16.9 million in 2021.

       There was no reason offered for the upgrade, which represents a substantially larger area than the seven million ha proposed by the ministry in March.

       The ministry did not break down its area outlook by crop, though analyst APK-Inform said Friday the 2022 grain harvest could fall 55% on the year.

       Corn could take a smaller share of the spring acreage if more land is dedicated to Ukraine’s staple food crops like buckwheat, oats, millet and peas, which was suggested by Ukrainian officials last month.

       However, it is unclear how farmers would be incentivised to change any pre-existing plans.

       It is also unknown whether farmers have been able to secure inputs, labour, equipment or whatever else they need for a full crop season. Yields are always at risk when any of those items fall short.

       Under the believable scenario that Ukraine’s 2021-2022 ending stocks rise at least 10 million tonnes above typical levels, that allows for a much lighter crop in 2022. But how light?

       If Ukraine produces just half as much corn as last year, total 2022-23 exports could top the 23 million-plus tonnes shipped in 2020-2021, which followed a poor 2020 harvest.

       That includes leftover stocks and a typical distribution of new supplies between domestic use and exports.

       But again, this is assuming that Ukrainian seaports can be fully open as normal for most of 2022-2023, and no one knows this for sure, hence the market anxiety and strong corn prices. Nearby Chicago corn futures on Monday pushed above US$8 (RM34) per bushel for the first time since 2012.

       Global corn importers will be rooting for Ukraine’s harvest as farmers in leading exporter the US are cutting acres 4% on the year to a four-year low, and planting there is not off to a quick start. — Reuters

       Karen Braun is a market analyst for Reuters. The views expressed here are the writer’s own