Even after Ukraine-Russia deal, grain supply will remain tight
Ukraine
Russia
Published Jul 26, 2022
Tridge summary
Just as Russian gas has started to flow back into Europe, grain stockpiles trapped in Ukraine because of the war could soon return to the global market. Poorer countries will get some relief from the resumption of supply, but perhaps not as much as they would like. Ukraine and Russia, with the intermediation of the United Nations (UN) and Turkey, reached an agreement this Friday that provides for the resumption of Ukrainian shipments of food through the Black Sea.
Original content
About 20 million tons of wheat and other grains in storage will need to leave the country in the coming months, as will the winter wheat crop, which is in the harvesting phase. Friday's deal is expected to avert a food crisis and social unrest in countries that rely heavily on Ukrainian imports — generally emerging economies whose consumers spend a larger share of their income on food. However, global inventories are lower than in recent years. The stock-to-demand ratio of major grains, including wheat and corn, is expected to fall to 29.8% this year, down from 30.7% in previous years, according to the Food and Agriculture Organization of the United Nations (FAO). . With the news of the agreement between Ukraine and Russia, wheat futures contracts on the Chicago Stock Exchange closed the day down more than 5%. The $30-per-ton difference between the spot price paid yesterday for Ukrainian wheat and futures contracts indicates investors are expecting extra supply and lower prices in ...
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