Russian Troops Seize Production on Ukrainian Farmland

Russian soldiers seized the production of some agricultural lands during the occupation of Ukraine. It has been noted that Ukraine's grain exports will be 15 million tons behind the estimates this year due to the effects of the war. This situation reveals that the prices of grain products will remain under upward pressure.

Ukraine is one of the major suppliers of wheat, corn, and sunflower oil. Ukraine suffered a major blow to production this year after the invasion of Russia. It is stated that approximately 15 million tons of wheat and grain will not be available in the markets. According to the information obtained from the producers in Ukraine, Russian troops in Ukraine are undermining production by seizing agricultural lands. Among the statements were that agricultural machinery, fertilizer, seed, and fuel stocks were confiscated and some of them were destroyed. While the yield of winter wheat and barley crops in the country's 2021/22 period decreased, production is expected to decrease further in the 2022/23 marketing year, which started in July.

The International Grain Council (IGC) evaluated that "Although there are efforts to increase exports with the railway line passing through the western borders of the country, total volumes are likely to be limited. While the expectation of Ukraine's corn exports decreased from 31.9 million to 21 million tons, wheat exports decreased from 24.5 million to 20.8 million tons. IGC also lowered its Russian grain export forecast from 37.7 million tons to 37.1 million tons. Volume may be hampered by trade finance restrictions and additional shipping insurance requirements."

According to S&P Global data, the price of FOB Black Sea wheat (Ukraine Deep Sea, 11.5 percent protein) rose to $415/ton last Friday, with an increase of $67 compared to February 24, when the war started. FOB Karadeniz 12.5 percent protein wheat (Russia) was sold at 420 dollars/ton with an increase of 60 dollars in the same period. In CBOT futures, the bushel of wheat has increased by 24 percent in the last month to over $10.

Rising wheat and maize prices are increasing the demand for rice in Asia, both for nutrition and animal feed. Many countries, including China, the world's largest feed market, are looking for alternatives. Increased intake of broken rice as animal feed.