🔎 The tensions in Russia and Ukraine are expected to pose further disruptions in agricultural trade as both countries are major players not only as suppliers but also as buyers. Tensions are expected to impact the fruit and seafood industry as well as the grains market. Tune into Episode 12 to learn more about the situation. 🎙
Tridge's Global Market Analyst Leah Lee joined us to share her insight into the situation.
📖 For more information on today’s episode, read our article on potential trade disruptions here.
💻 Want more agricultural insights? Get smarter and stay updated on the most important agricultural updates on https://www.tridge.com/intelligence-data/intro
0:00 Hey, thanks for stopping by
0:01 This is Free on Board, a podcast by Tridge.
0:04 You're in the right place if you're looking to stay up to date with the latest food and agricultural news.
0:09 Now onto the updates
0:19 [Hyesun] On Episode 12 of Free on Board
0:20 we're bringing you updates on how the Russia-Ukraine conflict is affecting non-commodity products
0:25 In specific buying markets, prices of agricultural commodities such as wheat, soybean, soybean oil, and corn have experienced rapid increases
0:32 as a result of the conflict, but it's not just greens that have been affected.
0:36 Russia is a major importer of products such as fruits and seafood.
0:40 I am joined today by Global Market Analyst
0:43 Leah Lee
0:43 Hey Leah, how are you doing today?
0:45 [Leah] Hi Hyesun,
0:46 I'm doing great.
0:46 Thanks for asking.
0:47 How are you doing?
0:49 [Hyesun] I'm doing great as well.
0:50 This is the first time we're having you on the podcast, isn't it?
0:53 [Leah] Oh yes it is.
0:53 So the recording room looks a lot more cozy than I thought it would be.
0:57 [Hyesun] Yes, I know you're actually our first in-person guest on the podcast.
1:01 So this is pretty exciting for me as well.
1:03 So, we have covered a lot about how the oil market and different grains market,
1:07 like wheat, soybean and corn have seen an upsurge in prices and how it's still affecting the oil and gas market.
1:15 [Leah] Yes, definitely.
1:16 Gas prices in California, I heard, are still over $5.
1:20 I have not seen this ever since I started driving.
1:22 [Hyesun] And when is that?
1:23 [Leah] In 2014.
1:25 [Hyesun] I see, I think I'll be sticking to walking for a while.
1:27 Along with the price increases in the commodity markets,
1:30 can you give us a brief overview of what went down in the key grain markets?
1:34 [Leah] Yes, as we all know, Russia and Ukraine are essential players in the global agricultural trade market.
1:40 And half of the Russian agricultural exports are grains and fish and 14% are oil.
1:45 Also for Ukraine, 45% of its exports are grain.
1:49 Other major exports include oils and oilseeds.
1:52 And the two countries supply a quarter of the global wheat supply,
1:55 which is pretty significant and there's definitely a pressure on the global food security from increased prices and unlimited supply of agricultural commodities
2:03 [Hyesun] and the sunflower oil market, for which the Black Sea region is a very big supplier.
2:08 [Leah] Yes, definitely. as stated before, the two countries are huge suppliers of vegetable oils
2:13 and in 2020, Russia and Ukraine supplied 58% of the global sunflower seed oil exports.
2:19 Totalling to 12.8 billion USD
2:21 and more than half of the world is depending on Russia and Ukraine.
2:25 for sunflower seed oil. For example, 95% of sunflower oil imported to China is from Russia and Ukraine.
2:31 Turkey and India also depend heavily on the two countries for sunflower oil.
2:36 [Hyesun] I see,
2:36 so basically more than half of the world is fully dependent on Russia and Ukraine for their sunflower oil supply
2:42 [Leah] as there aren't major sunflower oil suppliers besides Russia and Ukraine, importers of sunflower seed oils are also seeking potential alternatives
2:51 such as palm oil and rapeseed oil to substitute sunflower seed oil.
2:55 But edible oil prices are expected to increase due to the weak supply.
2:59 [Hyesun] Thank you for the update.
3:01 So we've talked about the products that Russia and Ukraine are big suppliers of,
3:05 but I also understand that there are other agricultural products like fish, citruses and grapes
3:09 that were affected because Ukraine and Russia are big importers.
3:13 [Leah] Yes, so Russia was the fifth largest citrus importer in 2020.
3:17 Some of the citrus Russia imported our grapefruit, oranges, lemons, and limes.
3:23 There's other fruits such as grapes and bananas.
3:25 Major fruit exporters to Russia and Ukraine, such as Turkey and Egypt, will try to reach new markets such as Europe.
3:31 [Hyesun] And a similar thing is happening in the seafood industry as well, right?
3:34 [Leah] Yes, exactly.
3:35 So 27% of frozen fish exports go to Russia and Ukraine.
3:40 Countries exporting agricultural products to Russia and Ukraine may have to search for 3:43new buyers like the fruit industry due to the decreased demand and trade regulations
3:49 So industries that depend on exports are facing losses as they face challenges
3:52 such as logistical disruptions, including shipment rejections in Russia
3:57 for example, Icelandic and Argentine fishing industry –
4:01 They're anticipating losses due to the conflict as a large portion of their fish supply is exported to Russia and Ukraine.
4:07 [Hyesun] I see, I remember back in early March when there was a temporary shortage of salmon here in South Korea
4:13 and the reason was because, although the majority of the salmon that we consume is from Norway,
4:18 the airway between South Korea and Norway was blocked because it passes through Russia.
4:24 So there was a pretty big delay in shipment.
4:26 [Leah] That's very true.
4:27 Due to the conflict,
4:28 Shipping has been chaotic:
4:29 Ports and airways have been closed and the consequences are delays and increased freight prices.
4:34 The effects are expected to affect the Ukrainian economy as well.
4:37 There is an estimate that Ukraine can potentially lose $6 billion USD
4:41 due to port closures, as they are a major supplier of agricultural goods.
4:46 [Hyesun] Right?
4:47 But I also heard that there is some good news as well.
4:49 [Leah] Yes, so on the bright side, Ukraine has lifted export bans on sunflower oil and corn.
4:54 And Ukraine has gone back to shipping corn to Europe for the first time
4:56 since they banned exports, but due to port closures
5:05t he corn was transported by train
5:02 [Hyesun] and that must not have been an easy transition to make.
5:05 [Leah] Yes, So now with the ports blocked and the railways as the only option, the capacity is 1/10 of the original capacity.
5:12 Most exports were transported by ocean freight, which is a more affordable option compared to railways,
5:17 but as Ukrainian export bans on corn and sunflower oil has been lifted, you can expect some trade between Europe and Ukraine via railway.
5:26 [Hyesun] I see,
5:26 so we remain hopeful.
5:28 Well thank you so much, Leah, for setting everything in context for us.
5:32 I feel like we're able to get a more clear understanding of what's happening in the specific markets
5:36 not only for the products that Ukraine and Russia are big suppliers of,
5:39 but also for the markets on the other side where they're really big, major importers.
5:46 Thank you Leah, again, for joining our podcast today.
5:49 [Leah] Thank you so much.
5:50 It was a pleasure to be on the podcast.
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6:08 Check out tridge.com/intelligence-data for more price analyses and up-to-date insights into the food and agricultural industry