An unheralded risk to global markets is the March 16 expiry of the Ukraine grain export deal and today, CIBC is highlighting that and other risks to global food security.
Ukrainian have officials pleaded with the UN for the start of negotiations to extend the Black Sea export corridor agreement and wants to include a fourth port of Mykolaiv but Russia doesn't sound eager to participate. Last year, Russian officials indicated they felt deceived when Ukrainian grains they thought were destined for the developing world instead ended up in Europe. Russia’s Foreign Minister cryptically said an extension of the day was only possible “if the interests of Russian producers of agricultural products and fertilizers are taken into account in terms of unhindered access to world markets.”
Russian and Belarussian fertilizer producers have been under sanctions.
Grain prices are down sharply since last summer and made new lows this month but IGC estimates imply corn supplies for 2023/24 could be 36% below this year's level and 53% below 2021/22 levels. Wheat supplies are likely to be approximately 28% below 2022/23 levels and about 44% below 2021/22 levels.
Today, CIBC highlights the fall in projected Ukrainian corn and wheat supplies.
In the longer term, Chinese farming is facing a serious problem with degradation, acidification, and salinization. According to the 2021 land use survey, China’s total arable land decreased from 334MM acres in 2013 to 316MM acres in 2019.
