In addition to the economic losses from a war that lasts longer than Russia imagined, the country will have serious problems with wheat exports, as long as the conflict with Ukraine persists.
The Russians are a success story in the evolution of cereal production in the last decade. In the 2012/13 harvest, they produced 38 million tons, a volume that has been growing and is expected to reach 91 million in 2022/23.
With the increase in production, the country had an increasing export potential. In this 2022/23 crop, the volume should reach 42 million tons. The Russian problem is who to sell to.
The war brought difficulties in foreign sales not only for the Russians, but for the other Black Sea countries, which also suffer the effects of world economic conditions.
Rising interest rates bring an economic slowdown, and the rising dollar adds to export difficulties.
Russia will have a record volume of wheat to export, but it has problems finding a market for its product, due to the blockade made by several countries, after the invasion of Ukraine.
The worst thing is that the Russians do not have a storage system sufficient to store all this surplus, according to consultant Pablo Maluenda, from PMCG, who participated in the 29th Abitrigo Congress, an event held in Foz do Iguaçu (PR).
Ukraine and Russia have the capacity to export 53 million tons of wheat in this 2022/23 harvest. This volume represents 25.4% of the total of 208.9 million that are traded on the world market, according to Maluenda.
With the war, Ukraine’s export potential fell to 11 million, after reaching 18.8 million in the previous period.
Russia’s performance in world trade will be important for international pricing. If the country is unable to export its cereal, the prices of other exporting countries, such as Argentina, will exceed the values ​​of the Russian product. Otherwise, the Russians will determine the market values.
Argentina is expected to produce 19 million tons in the 2022/23 crop, below the volume of the previous period. Exports will total 13 million tons, a product that will be sold to a larger group of countries than a few years ago.
The Argentines are reaching new markets, such as Chile, Ecuador, Peru, Colombia and countries in Africa and Asia. The Brazilian share dropped and is at 26.1% of the country’s foreign sales.
But Argentina has high stocks, and export purchases already reach 8.8 million tons of wheat that is still in the field. The Argentines will also have to seek a market for this volume of wheat.
In the Brazilian case, the data are still quite uncertain, but Maluenda says that there are bets on the market of a potential of up to 12 million tons, a volume equal to that of consumption.
The European Union and the United States have been reducing wheat production, said the consultant at the Abitrigo congress. In the American case, the strong option for corn ethanol reduced the wheat planting area.
Europeans began to import more from Ukraine and set aside the previous area dedicated to wheat for other crops.
The journalist traveled to Foz de Iguaçu (PR) at the invitation of Abitrigo (Brazilian Wheat Industry Association)
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