Ukraine’s farmers are expecting a fall in exports this year, despite expectations for a bumper grain harvest. The country is expected to see the previous year’s yield increase by 5-10% y/y in 2023, but export restrictions and low domestic market prices are expected to keep the agricultural sector unprofitable. Ukraine has maintained high levels of agricultural production over the past two years of full-scale war, particularly in crops such as corn, soybeans, and rapeseed. However, the price landscape has deteriorated compared to the previous year, and the difficulties of getting Ukraine’s grain to the international markets have increased. Farmers are expecting significant losses of up to $3.5bn in 2023, which poses a problem for the budget as grain exports are the country’s main source of foreign exchange earnings.
The drop in export revenues will hurt Ukraine’s fiscal woes, as it has been running a trade deficit in recent months. The National Bank of Ukraine (NBU) announced at the start of November that the government will be short some $9bn in the last months of the year, and Finance Minister Serhiy Marchenko said this week that there is a $29bn shortfall in funding in Ukraine’s 2024 budget. To solve the problem, Vysotskyi suggests finding ways to improve logistics, such as optimising export routes that could potentially lead to higher prices on the domestic market. One option being explored is Ukraine’s government in talks with Central European countries on the western route to EU markets and beyond on a new certification scheme that would allow exports of grain through these countries, but ensuring the grain is now sold to local traders. Another option is an agreement this month for Ukraine, Moldova, and Romania to speed up rail connections between ports.
As of November 10, Ukraine has harvested 71.5mn tonnes of the new harvest, and the US Department of Agriculture (USDA) has improved its forecast for Ukrainian corn and wheat exports. Updated global wheat forecasts predict increased supply, ending stocks, and lower consumption and trade volumes. As for corn, all indicators are anticipated to improve.