COVID-19 Market Report - Eastern Europe and Central Asia

Border Restrictions

Russia has closed its borders for travel from March 17th, until at least May 1st. Trading is still allowed.Starting from March 30th, traffic will be restricted through checkpoints across the state border of the Russian Federation. Neighbouring Ukraine has implemented more severe restrictions and has placed the entire country in lockdown. Until April 3, 2020, the state border of Ukraine will be closed for regular aviation, railway, and bus services for all passengers from any country. This restriction does not apply to freight transportation. There are more checkpoints along the Ukrainian border, especially with Russia, causing delays for trucks and long queues at the border due to careful sanitary control. Nevertheless, cargo transports will continue.

Bulgaria is currently in a State of Emergency and has banned all travels from Italy, Spain, France, UK, Northern Ireland, Germany, the Netherlands, and Switzerland. This decision excludes all trade-related land, air, and sea transportation means and personnel. Land borders with Greece and Turkey have also been unilaterally closed. This decision does not seem to affect trade between these countries but does cause interruptions in logistics.

Most countries in Central Asia have closed their borders for traveling, but trade is still allowed. Nevertheless, Kazakhstan closed its ports to prevent the spread of the coronavirus and increased border controls which have slowed down transport through these countries. Due to the border closure of Iran, many agricultural goods are now exported from Turkey and Russia through Kazakhstan to Southeast Asia.

Logistics

Due to quarantine measures to prevent the spread of the coronavirus, most border checkpoints are closed in Ukraine. Because of this, exporters whose products require veterinary control are advised to avoid loading places and to choose an alternative route. Also, as there are quarantine restrictions for vessels that have visited countries with the coronavirus, this caused accumulation of vegetable oil in ports and will lead to delays in vegetable oil shipments.

Border closures are expected to increase freight costs in Ukraine and Bulgaria due to the extra distance for travelers and increased sanitary controls. These routine checks create interruptions and slowdowns in the logistics chain and some orders are delivered with considerable delays.

There are kilometer-long queues of trucks on the border of Kazakhstan and Russia as Kazakhstan banned the export of food. Kazakhstani trucks carrying food products have been stopped at the border and sent back, causing massive delays.

Regulations

As of March 24th, the Russian Ministry of Agriculture temporarily suspended all grain and cereal exports. However, this ban was reversed the next day, and currently, all exports of grains are allowed.However, it is now reconsidering a limit on grain exports for three months. The government is also examining the possibilities of zero duties on the import of agricultural products to ensure the stability of the markets and prevent rising prices.

Ukraine has announced that it will not restrict the export of grain, sunflower oil, poultry meat, and other commodities for which Ukraine is a leader in supplying during the quarantine. Nevertheless, small agricultural producers are having trouble selling their products in the domestic markets due to logistics deficiencies.

Kazakhstan has restricted the export of food to ensure a stable domestic supply. In particular, increased demand for vegetables, fruits, flour in the domestic market was observed over the last few weeks.Starting from April, Kazakhstan will set quotas for export shipments of wheat and wheat flour, of approximately 200K tons for wheat and 70K tons for wheat flour. Exports of wheat flour have been completely banned since March 22.Kyrgyzstan has also restricted food exports, most notably wheat and meslin, wheat flour, rice, pasta, vegetable oils, eggs, sugar, and almost all types of animal feed.

Influences on Exports & Imports

The coronavirus has knocked down export prices of Ukrainian wheat. FOB-based export prices have fallen by USD 17 to USD 202-207 per metric ton since late January. The reasons for such a steep fall were the fear of the global economic consequences from the coronavirus pandemic, as well as increased competition from Russian grains, for which the price of wheat has risen to USD 170 per ton. Prices of other Ukrainian grains, such as corn and barley, fell in a similar fashion.

Export prices ofcrude sunflower oil from Ukraine dropped to an annual minimum amid panic in the market and lack of demand. While the restoration of trade activity in China and India gives hope for Ukrainian exporters of a slight increase in demand, the drop in oil prices limits the possible increase in prices. Bulgarian sunflower prices, on the other hand, have seen very high prices, around EUR 800 per metric ton (USD 883.69). The prices have been high since late 2019 due to local supply shortages and a rumor of more EU subsidies being allocated to sunflower seeds for biofuel production. Exporters claim that the coronavirus has not altered their export prices and exports to Greece and other nearby export destinations continue strong despite the virus.

Prices of lemons, garlic, and ginger have seen strong price increases in Ukraine by 30% between March 23 and 24 alone. This is mainly due to shortages in China. Potato prices have also increased rapidly, by 43%, due to decreased imports from Russia and Belarus.

Russia notes high prices for onions as exports from Kazakhstan are suspended. Prices have jumped by a third in just one week.

Domestic Supply & Demand

The consumption of pulses in Bulgaria is said to have increased for common beans by 300% and lentils by 200%.Flour, sugar, yeast, salt, vinegar consumption has risenby 120%, pasta products by 90%, and canned foods by 150% in the past few weeks compared to the end of February 2020.In addition, due to panic shopping, citrus products (lemon, orange, mandarin) and meat (pork and beef) prices have risen.

Surprisingly, the consumption of honey and other bee-products has increased in Ukraine as a direct result of the coronavirus. Many people believe that consuming bee-products will help boost the immune system and sales have spiked as a result.

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