THE GRAIN WAR: Nearly 18 months of fighting have taken a heavy toll on Ukraine’s grain production, the newest U.S. Agriculture Department forecast confirms, while Russian farmers are expected to harvest another bumper crop this year, our Doug Palmer reports. By the numbers: Ukraine is forecast to produce just 21 million metric tons of wheat this year, the USDA said Friday in its latest global crop forecast. On the bright side, that’s higher than the department’s July forecast of 17.5 million tons. But it is only about two-thirds of Ukraine’s pre-war level. USDA also projected Ukrainian farmers will harvest only about 34 million tons of corn and other coarse grains in 2023, far less than the 53.5 million tons harvested the year before the war. What they’re saying: USDA chief economist Seth Meyer said in an interview that Ukrainian farmers cut back on planted acreage this year in response to higher transportation costs and lower prices caused by the war. Ukrainian producers earned less from their crops, even with a U.N.-brokered deal that kept some grain flowing out of Black Sea ports and "Solidarity Lanes" created by the EU to funnel overland shipments. “They went from having pretty good prices relative to the rest of the world to not-so-great prices relative to world prices†because of increased transportation costs, Meyer said. It’s possible Ukrainian farmers could plant even less next year because of the continuing squeeze, he added. What’s next: The expected sharp drop in production is one reason USDA is forecasting Ukraine to export just 10.5 million tons of wheat in the 2023-24 marketing year, down from about 19 million in 2021-22, which included the first few months of the war, and nearly 17 million last year. USDA also projects Ukraine’s coarse grain exports will fall to 21.4 million tons in 2023-24, from 32.9 million in 2021-22 and 30.8 million last year. Russia’s recent refusal to extend a U.N.-brokered deal allowing Ukraine to ship grain out of its Black Sea ports is making it even harder for the war-torn country to export its agricultural products to markets around the world. That led to USDA keeping a relatively dim grain export forecast for the next year. But Meyer noted that Ukraine was already shipping much less under the Black Sea Grain Initiative, which allowed for safe passage of agricultural shipments, before it formally ended in July. That was due to a variety of reasons, including dwindling supplies and delays related to inspections required by the agreement. Renewing the pact might increase Ukraine’s exports in the coming year but there’s not as much upside potential as there was when the deal was first struck, he said.
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