Key pieces of the global grain trade are being shaken up again. A dramatic recovery in wheat and coarse grains exports from Russia and Ukraine is already under way, reversing an equally dramatic collapse seen in the past twelve months. This huge change has great implications for other competing exporters, some of which are likely to see their sales volumes sharply reduced as a direct consequence.
These developments take place amid only a limited prospective change in import demand. Purchases of grain by importing countries, during crop year 2011/12 ending June 2012, currently are expected to increase slightly.Among individual importers, some positive signs have emerged, but potential for notable increases is absent. A few negative factors can be identified as well although, similarly, no particularly prominent reductions are likely.
 
SOARING BLACK SEA EXPORTS
In the past crop year ending June 2011, grain exports from the main Black Sea suppliers — Russia, Ukraine and Kazakhstan — fell precipitously. From 51.4mt (million tonnes) in the previous twelve months, the total dropped by 57% to 22.3mt. The group’s share of world trade in wheat and coarse grains was reduced from just over one-fifth, to less than one-tenth.
This contraction followed poor summer 2010 harvests across the region, caused by severe drought. In central and southern parts of Russia’s western grain growing areas, the worst drought in more than one hundred years damaged crop yields. Production in Ukraine and Kazakhstan also was adversely affected by excessively dry and hot weather. Greatly constrained availability and government export restrictions quickly resulted.
Summer 2011 grain output has rebounded, benefiting from much improved weather through the growing season. Recent International Grains Council estimates put Russia’s harvest at 90mt, a 54% jump from last year. Ukraine is likely to achieve a 30% increase, to 50mt (although quality suffered from excessive rainfall during harvesting), while Kazakhstan sees a 77% rise to almost 21mt.
Prospects for foreign sales have been enhanced by the expanded supplies available. IGC forecasts suggest that the three countries’ wheat and coarse grains export total will more than double to 52.6mt. The most dramatic upsurge will be seen in Russia, exporting an estimated 23.0mt, a five-fold leap from the depressed previous volume. Ukraine could export 21.4mt, up by 75%, while Kazakhstan’s volume is 41% higher at 8.2mt.
 
DOWNSIDE FOR OTHER EXPORTERS
Competition from Black Sea suppliers on world markets is clearly intensifying. Wheat from all three countries comprises the largest part, accompanied mostly by corn and barley from Ukraine. Much larger volumes available coupled with competitive pricing will enable these exporters to regain market share among North African and Middle East buyers and elsewhere.
will be disadvantaged? As shown by the table below, sharply reduced European Union and United States grain sales are predicted by the IGC in 2011/12. The USA’s exports could be 17% lower at 73.1mt, and the EU’s exports could be 28% lower, at 20.4mt. Changes foreseen among other key exporters are not expected to be very prominent.
Forecasts of sharply reduced wheat shipments from both the USA and EU are especially notable features. These expectations directly reflect the huge upturn in Black Sea wheat availability, sales of which will displace volumes previously supplied by other exporters in many markets.
The likely impact of grain trade changes on activity at ports, in the exporting countries affected, is fairly clear. But the impact on bulk carrier employment is harder to evaluate. One aspect is evident, however. Black Sea exports typically include a large proportion of mainly short-haul trade to Mediterranean and Middle East countries. When additional quantities replace long- haul volumes (from the USA, for example) overall bulk carrier tonne-miles are reduced.
 
SLUGGISH GLOBAL IMPORT DEMAND
All or most grain exporters probably would benefit if a sharp upturn in global import demand occurred, during the current crop year.This seems unlikely to happen, based on present signs. There are no indications of large increases in imports among the major importing areas.
The latest IGC (end October) calculations show the volume of world trade in wheat and coarse grains growing moderately by 3% in 2011/12, compared with the previous year, at 250.2mt. This sluggish performance follows a small 1% increase in 2010/11. Good domestic harvests in most northern hemisphere importing countries this summer and autumn have greatly limited potential for extra purchases. Additional import demand envisaged in the Middle East is one bright spot. This region’s 2011/12 volume could be 9% higher at 38.4mt, partly reflecting a sizeable 15% rise in Saudi Arabia, which comprises about one-quarter of the total, to 10.8mt. This may be partly offset by lower imports into North Africa, down by 2% to 36.3mt. Elsewhere there are not many remarkable features. Where large percentage changes are envisaged, the volumes involved are small. One example is China’s wheat and coarse grains imports, which could increase by 64%, from 4.7mt to 7.7mt in the current year. Despite the great expansion of Black Sea supplies, imports into the FSU (former Soviet Union) group of countries as a whole are expected to remain almost unchanged at just over
6mt.