Content ID

324801

How important is Ukraine to global agriculture and the commodities markets?

To get a clearer picture of Ukraine’s impact on global agriculture and the commodities markets, I’ve gathered the key information and numbers below.

Background

Where is Ukraine? 

The country is located east of Poland and Romania, south and west of Russia, north of the Black Sea. 

How far north is Ukraine?

Its southern border is about 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 is about the size of Texas.

How long is the growing season in Ukraine?

It is similar to Fargo, North Dakota, but they start planting earlier and harvest earlier. In February, they should be side-dressing wheat. In late March, they will start planting corn.

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

Let’s compare them to some states in North America. The USDA does not break out 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%

U.S.

15.1

2.7

18%

In other words, Ukraine exports about twice what Minnesota and Iowa combined probably export. This means planting problems in Ukraine would have more 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%

U.S.

2.7

1

37%

Likewise, for wheat, exports from Ukraine are nearly equal to the total wheat exports from the U.S. and dwarf production or export-share from Kansas.

How much does Ukraine have on the books (cash wheat and corn) to sell that may not get shipped?

Again, these are estimated from different trade sources:

  • Wheat: 220 million bushels – most goes to North Africa
  • Corn: 550 million bushels – about 50% is sold to China

If it’s not available from Ukraine, where will they get it?

  • Wheat: Europe, India, Australia, and the United States
  • Corn: limited amount from South America; most of it from the U.S.

The Effects of Less Grain Production in Ukraine*

If Ukraine only produces half of a corn and wheat crop, how does that impact global ending stocks in the next marketing year?

If the wheat crop is cut by 50% and domestic use stays the same, then global ending stocks of wheat will drop from 280 million metric tons to my estimate of 270 million metric tons. The world will not run out of wheat.

If the corn crop is cut by 75% and domestic use stays the same, then global ending stocks of corn will drop from 300 million metric tons, to my estimate of 260 million metric tons. The world will not run out of corn.

Price works, but we do not see any evidence of price rationing – yet.

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

What about other ag businesses in Ukraine?

One large publicly-traded tractor and farm equipment dealer, Titan International, has 10 dealerships in Ukraine, with 1,600 employees. Titan has indicated they will need to change their 2022 profit outlook because of the uncertainty of sales in Ukraine.

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