Ukrainians Struggle to Ship Grain Out of War-torn Country

Imagine if a foreign power blockaded the U.S. ports in the Gulf of Mexico. And, imagine if someone had decided that all the train rails west of the line of states from Louisiana to Minnesota had to be a different width than those to the east.  Picture that and you can see some of what farmers and grain shippers in the Ukraine are up against as they try to move their corn, wheat and sunflower oil to traditional markets in North Africa and Asia in the middle of an invasion.

Despite those problems, the Ukrainians moved more than a million metric tons of grain across their western border in April, according to Arlan Suderman, Chief Commodities Economist for StoneX Financial Inc. Suderman spoke during the U.S. Soybean Export Council’s May 12 World Agricultural Supply and Demand Estimates Report Webinar.  “That’s probably less than 20% of what they were exporting through their ports before the invasion in February,” said Suderman. “It’s probably going to go down as we get later in the spring and we see other Eastern European countries focus those rail lines on moving their wheat harvests.”

The situation in the Ukraine is very sad, especially for agriculture, according to Suderman. Agriculture infrastructure specifically is being targeted; equipment being either destroyed or taken, elevator facilities, infrastructure, bridges, and rail lines.

“They’ve done a fantastic job of keeping the rail open," noted Suderman. “I saw one report that no rail line has been down more than an hour despite the attacks. But they can never replace what they could do through the ports,” said Suderman. “If the war would end today, the optimistic outlook is that it would be six months before they could do any measurable exports through the Black Sea ports.”

Continuing war

Ukrainian farmers, meanwhile, have planted about 75% of the expected acreage of their spring crops. “They are focusing more on the cereals that can be used for food and require lower levels of inputs,” said Suderman. “If you look at the area that’s been planted and expected to be planted, it looks like it might be down about a third.  They’re looking at about half a crop because, as we talk to our customers there, we’re hearing reports of fuel shortages, fertilizer shortages and chemical shortages, so yields probably will be hurt. Then it comes down to if they’re able to produce it will they be able to export it?”

Suderman shared that one of the problems with rails is the Ukrainian tracks are the old Russian style or 10 centimeters wider than the European gauge. So, every rail car has to be jacked up with a new carriage put under it or unloaded and reloaded onto the Polish or Romanian rail cars. So, you have thousands of cars backed up at the border.

Border waits

Suderman said, “The 19 to 25-day waiting periods at the Ukrainian borders reinforce the importance of infrastructure not only in eastern Europe but in the United States, as well. In the U.S., it’s easy to take this for granted, but having a strong infrastructure system is really critical for our reliability as exporters of oilseeds and other commodities.

Editor’s Take:

Sad and unnecessary are the words that come to mind after reading a story like this. The Russian invasion is totally unnecessary and is disrupting the lives of so many people, especially in the Ukraine, but really all around the globe. Millions of people depend on the Ukrainian production and exports to sustain their food and nutritional needs. While the situation is very favorable for U.S. commodity prices and exports, it would be welcomed by many to simply return to normal and live life as it was prior to the invasion. In the meantime, farmers/ranchers in this country will be the benefactors and have plenty of money to spend on new trucks. Get busy now to inform them about your status as a CAD member. What better way than putting your inventory on AgTruckTrader.com. Terrific news - the free trial period has been extended through the end of August! Don’t waste precious time, get on AgTT today!