Some analysts have suggested Ukraine’s grain exports would resume in a hurry if there was a ceasefire.
But that is not the assessment of the head of one of the world’s largest grain companies, which has significant assets in the country.
Bunge Limited’s chief executive officer Greg Heckman mentioned during a conference call on the company’s first quarter 2022 earnings that Ukraine’s agriculture industry will take time to recover when a ceasefire finally occurs.
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Ukraine is a major player in grain and oilseed markets ranking first in the world for sunflower oil exports, second for barley, third for canola and wheat and fourth for corn.
Bunge has over 1,000 employees, two oilseed processing plants, a port facility, several grain elevators and an administrative office in Ukraine.
Its port facility has been damaged but the destruction does not appear to be significant.
Heckman was asked how long there will be a void in the global supply of crops and processed products resulting from the war in Ukraine.
“There will be a long tail on this,” he said.
Infrastructure will need to be repaired, seaborne logistics need to be untangled and waters need to be cleared of floating mines.
“(It) will be a long period of time before you get back to exactly where that was,” said Heckman.
He said the company will have to rely more on its South American assets to supply the world with vegetable oil for the foreseeable future.
Some analysts have suggested Ukraine would rapidly become a major exporter once again if the war came to an end.
SovEcon is forecasting that the country could ship out 15 to 20 million tonnes of wheat if there was a ceasefire in early May.
Some export activity is taking place even in the midst of war.
Argus Media reports that Ukraine recently shipped its first Panamax-sized vessel of corn since the start of the Russian invasion.
The shipment of 71,200 tonnes of Ukrainian corn was made from the Romanian port of Constanta.
There could be further shipments through that port but Ukrainian crops will face stiff competition from Romanian crops starting in July.
“Romanian origin is expected to be preferred by the port operators as domestic producers can ensure delivery to port terminals, while for Ukrainian traders this could still be a challenge,” said Argus in a press release.
Latvia has announced an initiative to ship Ukrainian grain, delivered via rail through Poland, through its three main ports.
However, there is very limited capacity for cross border rail shipments between Ukraine and Poland.
“Both Ukraine and the Baltic countries have broad-gauge railways rather than the standard-gauge railway in Poland, meaning that Ukrainian railcars will need to exchange gauges twice — first, at the Ukraine-Poland border and then at the Poland-Lithuania border — to reach the Latvian ports,” said Argus.
Elena Neroba, business development manager with Maxigrain, a Ukrainian agri-brokerage firm, told Argus that European ports are ready to transship Ukrainian cargoes but there are problems going that route as well.
“They do not have enough storage capacity for their accumulation and logistics routes to some of the ports are a real adventure,” she said.
Neroba said the only plausible way for Ukraine to boost its ocean shipments is to organize the escort of grain ships through the Ukrainian port of Odessa under the auspices of the United Nations.
sean.pratt@producer.com
