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The Russian invasion of Ukraine is having significant impacts on world grain and oilseed markets

Cereals Canada is saddened by the situation and is hopeful for a peaceful resolution to the significant humanitarian and social crisis facing Ukraine. We also understand the challenges and uncertainty this situation creates in world grain markets.

The Russian invasion of Ukraine is having significant impacts causing uncertainty and volatility on world grain and oilseed markets. The Black Sea region which includes Ukraine and Russia is a significant exporting region as they account for 30% of the 2021 global wheat exports.

Impact to Canadian Farmers:

With the Black Sea supply removed from the international market, there has been a sharp upward movement in grain prices. The upward price movement in the lower protein wheat segments has narrowed the price differential to the high-protein wheat from Canada. “The forecasted seeding acres for cereals grains remains optimistic for Western Canada and there may be a slight increase in acres,” says Todd Hames, Cereals Canada Board Chair and Alberta wheat farmer. “

As a national organization, Cereals Canada provides leadership on behalf of the value chain in priority areas including market development and support, market access and trade, science and innovation, advocacy and awareness and sustainability.

Canada accounts for around 12% of world wheat trade on average but due to drought conditions in 2021 which impacted production, Canada is expected to be closer to 8%

“Canada is in the business of providing global food security to the world,” says CEO Dean Dias of Cereals Canada. Canadian wheat is exported to over 70 different countries. In 2021, Canada produced just under 19 million tonnes of non-durum wheat. This is about 30% less than our typical (5-year average) production of 26.5 million tonnes.

World Grain Trade (2021/22 Crop Year Forecast)

WheatBarleyCorn Canola
Ukraine12.4% 17.9%17.8% 16.9%
Russia16.9%6.0%1.1%2.8%
EU16.7%28.3%2.1%1.4%
Canada8.1%6.0% 0.5%41.5%
United States11.6% 0.6%35.3%0.7%
Australia12.5%23.5%0.0% 34.5%

Others
21.7%17.9%43.1%2.1%
Total Trade
(Million MetricTonnes)
196.933.6 178.814.2
Source: IGC; Feb 2022

The removal of two of the largest wheat exporters from the market has impacted the global supply. Ukrainian ports are currently closed. While Russian export facilities remain open, exports are expected to be severely curtailed due to the lack of vessel supply.

Top 10 – Russia and Ukraine 2020 Wheat Exports by Destination (Metric Tonnes)

Ukraine

Egypt 3,075,224
Indonesia 2,718,664
Bangladesh 1,514,725
Pakistan 1,244,447
Turkey 1,009,699
Tunisia 984,016
Morocco 956,483
Yemen 708,249
Lebanon 669,663
Philippines 631,966
Others 4,546,639
Source: ITC Trademap

Russia

Egypt 8,254,553
Turkey 7,900,554
Bangladesh 1,940,854
Azerbaijan 1,385,008
Sudan 1,333,408
Pakistan 1,173,080
Nigeria998,131
Yemen796,103
Tanzania 700,911
UAE 674,558
Others 12,109,855
Source: ITC Trademap

Canadian farmers look to their sustainability practices which include crop rotation for making seeding decisions. Moisture levels and input costs are also considered. The invasion impacts all aspects of agriculture including fertilizer but also energy. Russia is a significant fertilizer producer and exporter. “Commodity prices are increasing so are seed, fertilizer, fuel and machinery,” says Hames.

“The situation is changing daily causing uncertainty in the world making it impossible to predict the next impact,” says Dias.