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Ukraine Grain Exports – Myths And Reality
A deal between Ukraine and Russia aims to ease the global food crisis. – New York Times – Jul 23, 2022
BRUSSELS — Russia and Ukraine signed an agreement in Istanbul on Friday to free more than 20 million metric tons of grain stuck in blockaded Black Sea ports in Ukraine, a deal aimed at bringing down soaring grain prices and alleviating a mounting global hunger crisis.
The highlighted claims are as false as much of the other NYT reporting on Ukraine.
Ukraine grain exports reach 47.2 million tonnes so far for 2021-22 – World-Grain.com – Jun 6, 2022
KYIV, UKRAINE — Ukraine has exported 148,000 tonnes of grain in the first five days of June, pushing its July to June 2021-22 marketing year total to 47.2 million tonnes, the country’s agriculture ministry said on June 6, Reuters reported.
The ministry said the total volume included 18.578 million tonnes of wheat, 22.4 million tonnes of corn and 5.7 million tonnes of barley, with corn shipments dominating the June start, Reuters reported.
…
Ukraine reached 54.9 million tonnes of wheat, corn and barley exports in 2019-2020, but dipped to 44.9 million tonnes in 2020-21, mostly on lower wheat production, according to the US Department of Agriculture's (USDA) Feb. 1 Foreign Agricultural Services (FAS) quarterly report. Before Russia's invasion, Ukraine had been projected to export 63.7 million tonnes of the grains in 2021-22.
The above numbers are more than 6 weeks old. Back then the difference between projected exports and exports up to June 5 was 63.7 – 47.2 = 16.5 million tons.
Ukraine's grain exports to reach 2 mln tonnes in June – deputy minister – Reuters – June 20, 2022
Ukraine’s grain exports will increase to 2 million tonnes in June from 1.7 million tonnes in May and reach the maximum volume that Ukraine can ship by land routes, First Deputy Agriculture Minister Taras Vysotskiy said on Monday.
Since the first report a further 3 million tons of grains have been exported. The total left to export from the last season is thereby likely down to about 13 million tons.
Where the New York Times found '20 million metric tons' 'stuck in Black Sea ports in Ukraine' (because the Ukraine has mined the approaches) is unexplained.
As for 'soaring grain prices' please consult these charts.
Wheat
Source: Trading Economics – biggerCorn
Source: Trading Economics – bigger
To me it does not look like the recent prices have 'soared'.
The NYT also claims that the release of Ukrainian exports will be 'alleviating a mounting global hunger crisis'. In 2021 Ukraine's share of global wheat exports was 8.5% while Russia's was 13.1%. Since February exports from Russia had been hindered by 'western' sanctions on Russian banking, freight insurance and port access. In connection with yesterday's deal those sanctions have been at least partially removed. It will be Russian exports that will alleviate the hunger crisis much more than Ukraine's.
The NYT once had fact checkers who looked out for mistakes like the above ones. That now seems to be uncommon.
The main wheat farming in Ukraine occurs in the east and south where the war has likely led to much less planting during this season than in previous years. It is therefore unlikely that whatever will get harvested will be exported by farmers as local needs will have to be satisfied first.
Source: USDA – bigger
(The map above does not reflect the natural distribution. During the 2016-2020 period pictured above Luhansk and Donetsk had less than the usual production due to the civil war that had started in 2014. Crimea likewise had much less than the usual agricultural production as the Ukraine had since 2014 blocked its water supplies.)
Summary of the Ministry of Defense of the Russian Federation on the progress of a special military operation on the territory of Ukraine (07242022)
The strike of high-precision long-range sea- and air-based weapons hit the aviation equipment of the Ukrainian Air forces stationed at the Kanatovo military airfield in the Kirovograd region.
In the seaport of Odessa, on the territory of a ship repair plant, high-precision long-range sea-based missiles destroyed a Ukrainian warship in dock and a warehouse of anti-ship missiles “Harpoon” delivered by the United States to the Kiev regime. The production facilities of the enterprise for the repair and modernization of the naval personnel of the Naval forces of Ukraine have also been put out of operation.
As a result of the fire damage to the positions of the 108th and 109th battalions of the 10th Mountain Assault Brigade of the Armed Forces of Ukraine in the area of Verkhnekamenskoye settlement of the Donetsk People’s Republic, more than 70 percent of the personnel were destroyed.
In the city of Nikolaev, high-precision weapons of the Russian Aerospace Forces struck the warehouses of weapons and ammunition of the 28th mechanized Brigade of the Armed Forces of Ukraine and the 123rd brigade of territorial defense on the territory of the diesel locomotive repair plant. More than fifty personnel, more than three thousand artillery ammunition of various calibers and 10 armored vehicles were destroyed.
During the day, nine control points were hit, including the joint command post of the Kakhovka group of troops in the Zhovtnevoye settlement of the Mykolaiv region, two control points of the 54th and 65th mechanized brigades of the Armed Forces of Ukraine in the areas of the Kurakhovo settlements of the Donetsk People’s Republic and Novodanilovka of the Zaporozhye region.
In addition, seven warehouses with ammunition and fuel were destroyed in the areas of the settlements of Reznikovka, Ostroye of the Donetsk People’s Republic, Galitsinovo of the Mykolaiv region and the city of Mykolaiv.
In the area of the settlement of Artemovsk of the Donetsk People’s Republic, Russian air strikes destroyed two units of the Armed Forces of Ukraine, numbering up to a company, two M777 howitzers manufactured by the United States, and in the area of the city of Nikolaev – the electronic warfare complex “Bukovel”.
As part of the counter-battery struggle, three platoons of Grad multiple launch rocket systems were suppressed in the area of Grigorovka, Verkhnekamensk and Seversk, two artillery platoons of Msta-S self-propelled artillery installations, eight artillery platoons of Msta-B guns, 18 artillery platoons of D-20 howitzers, as well as nine artillery platoons of self-propelled artillery “Gvozdika” installations in firing positions in the areas of the settlements of Paraskovievka, Opytne, Veseloe, Razdolovka, Bakhmutskoye, Vodiane, Serebryanka and Kamyshevakha of the Donetsk People’s Republic.
Russian air defense means shot down five Ukrainian unmanned aerial vehicles in the areas of the settlements of Korobki, Pyatikhatka, Kherson region, Topolskoye, Kharkiv region, Shcherbaki, Zaporozhye region and Donetsk city during the day. In addition, in the areas of Novonikolayevka, Zaporozhye region, Makeyevka, Donetsk People’s Republic and Alekseevka, Kherson region, ten shells of multiple rocket launchers “Hurricane” and “HIMARS” were intercepted.
In total, since the beginning of the special military operation, 260 aircraft, 144 helicopters, 1,605 unmanned aerial vehicles, 357 anti-aircraft missile systems, 4,156 tanks and other armored combat vehicles, 763 multiple rocket launchers, 3,196 field artillery and mortar guns, as well as 4,457 units of special military vehicles have been destroyed.
Posted by: Summary07242022 | Jul 24 2022 10:30 utc | 173
@Down South #50
I think it is important to put some numbers into the context Putin references.
First: there are many different types of fertilisers. The “USDA Acreage Report, National Agriculture Statistics Service (NASS), June 30, 2020 ISSN: 1949-1522” references the 6 major ones in the context of 5 major crops: N/P/K/S/Zn/B vs. Corn, Soy, Wheat, Cotton and Alfalfa.
P/K/S/Zn/B are all basically mined: phosphorus, potassium, sulphur, zinc, and boron. Mining is energy intensive so higher energy prices affect this activity but the energy used is more on the transportation/heavy machinery = diesel type.
N = nitrogen is principally created using the Haber Bosch process, which converts natural gas to ammonia, then the Ostvald process to convert ammonia to nitric acid. Mixing ammonia and nitric acid gives you ammonium nitrate – a fertilizer as well as the principal active ingredient in an ANFO bomb such as was used in Oklahoma City or the first WTO attack.
Just focusing on Nitrogen:
Crop| Acreage| N-used-in-tons| Lbs/acre
Corn 92 8,280,000 180
Soy 83.8 754,200 18
Wheat 44.3 1,772,000 80
Cotton 12.2 488,000 80
Overall 232 11,294,200 97
11.3 million tons of nitrogen fertilizers used in the 2020 crop (as estimated by the USDA) on 232 million acres of crops.
Haber Bosch converts about 10 MWh of natural gas to 1 metric ton of ammonia = 34,500 cubic feet NG per metric ton of ammonia.
Ostvald takes in ammonia, air, water and platinum group type catalysts and converts to nitric acid at a rate of 2.4 GJ/ton NH03. ~285 kg of NH4 + Ostvald = 1 metric ton of nitric acid, so 2250 cubic feet of NG for Ostvald plus another 9832.5 cubic feet for the input ammonia = ~12100 cubic feet NG per metric ton of nitric acid.
Ammonia nitrate in turn is roughly 4/5s nitric acid, 1/5 ammonia so NG use per metric ton of ammonium nitrate is roughly 16900 cubic feet of NG.
You can use ammonia directly, but ammonia is liquid, caustic and degrades.
So now that we know how much nitrogen fertilizers are used, and how much NG is needed to make ammonium nitrate – we have a consumption number for the nitrogen fertilizers used by US farmers: 11294200 short tons = ~173 billion cubic feet of NG – assuming 100% is ammonium nitrate (direct ammonia use would mean more NG used). To put this in perspective, the US used about 30.5 trillion cubic feet of natural gas in 2020 – so fertilizer production is a bit over 0.5% of all natural gas used.
Now let’s look at the economics of NG. Wolfstreet just published an overview on natural gas
Note the spiking LNG exports, the trough of NG prices (due to fracking), and the fact that NG prices are probably not going to go back to the $2-$4/1000 cubic feet range in the foreseeable future. (Wolfstreet’s graph uses mmBTU, but 1 mmBTU = 1000 cubic feet of NG)
At $2-$4 – the NG cost of the US nitrogen crop is $346 to $692 million dollars.
But at $8/1000 cubic feet, this cost jumps to $1.385 billion – or roughly $1 billion more on food per year. Hardly a big deal right?
To put this in perspective: the gasoline price increases since Biden’s inauguration are costing the American economy around $250 billion more a year.
HOWEVER: US household spending on gasoline was only 2.5% in 2015 – so maybe 3.5% to 4% now.
US household spending on food is over 10%.
How much will the increases in fertilizer, diesel, pesticide, propane, and tractor parts affect the price of food?
The last CPI report showed 12.2% year over year increases in food prices = meaning food price impacts on household finances are already on par with gasoline impact:
June CPI for Gasoline was +59.9% yoy = increase of household percent spend on gasoline by 1.5% (2.5% to 4%?) vs
June CPI for food 12.2% yoy increase = increase of household percent spend on food by 1.26% (10.3% to 11.56%).
As I’ve noted many times already – the impact of the latest spike in fertilizer costs is going to be late summer/fall, when post 2/24/2022 sowed crops are going to be harvested and sold.
And some more data to give an idea of the impact around the world: household spending on food as a percent around the world
US: 10.3 in 2021 –> 11.56% in June 2022
Germany: 321 euros/month on food/tobacco/beverages vs. 4715 income = 6.8% – but this is 2015 data (destatis.de)
Turkey: 24.8% (2015 article)
China: 29.8%
Russia: 29.8%
UK: 12.7%
And lastly: EU NG prices are around $34/MMBtu = $34/1000 cubic feet NG
Consider this in light of the $2/$4/$8 numbers the US is looking at.
Posted by: c1ue | Jul 24 2022 12:46 utc | 189
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