In an increasingly global marketplace, a dry wheat-growing season in Russia can lead to big sales for U.S. corn growers. As the Russian drought drags on and the resultant export ban remains in place, international grain buyers are looking to the U.S. for corn to help meet ongoing demands.
While the Russian Statistics Committee estimates Russia’s domestic wheat production at 70-75 million metric tons (mmt) – a 15 mmt reduction from earlier estimates – the U.S. Grains Council (USGC) estimates that number to be roughly 65-68 mmt. This change in grain balance will inevitably have a serious impact on grain prices and Russian government policy.
Historically, Russia exports between 6 mmt and 7 mmt from August through December. Because of the current ban, this figure will need to be filled by other sources. While the world’s supply will be able to cover the deficient, the more difficult problem will be if there is no rain in the next six weeks. This will inhibit Russia from planting its winter wheat crop, affecting its ability to export. This will impact next year’s global grain market in a significant way.
In Israel alone, corn imports are also expected to increase substantially due to the Russian wheat situation, reaching 1.5 mmt (59 million bushels). The U.S. market share for corn in Israel will increase to about 30%, compared to last year’s 10% share.
Additionally, continued dry conditions in Ukraine have seriously damaged its corn crop, with reported losses between 4 mmt and 5 mmt (157-197 million bushels). Ukraine’s president has informally announced that major grains such as wheat, barley and corn will need quotas imposed for export beginning Aug. 20.
USGC Regional Director in the Middle East Joe O’Brien says, “These recent developments in Russia and Ukraine could help U.S. market share in other countries as well, such as Saudi Arabia, and help increase the exports of U.S. grains to the Middle East.”