What's Happening?
Grain shipments from Russia and Ukraine have significantly decreased, with a combined drop of 49% year-on-year between January and August 2025. This decline is attributed to weaker grain harvests in the latter half of 2024, resulting in a 10% reduction in production compared to pre-war levels. Russia and Ukraine, previously among the top global grain exporters, have faced challenges due to adverse weather conditions and geopolitical tensions. Russia reduced its wheat export quota by 63% from February to June 2025, while Ukrainian shipments have been disrupted by war-related issues and the expiration of the EU's tariff-free trade agreement for Ukrainian agricultural exports.
Why It's Important?
The reduction in grain shipments from Russia and Ukraine has contributed to a 6% decline in global grain shipments, affecting the demand for various shipping vessels. This situation has led to increased shipments from other countries like the U.S., Canada, Australia, Argentina, and Romania, although these have only partially compensated for the shortfall. The shift in trade patterns has seen 70% of Russian and Ukrainian grain shipments directed towards the Mediterranean, Black Sea, and Middle East, marking a significant change from previous years. The decrease in shipments to East Africa and Asia highlights the broader impact on global food supply chains and trade dynamics.
What's Next?
A partial recovery in Russian and Ukrainian grain shipments is anticipated over the next year, driven by an expected 19% increase in Ukrainian maize yields. However, wheat shipments may remain stable due to a projected 2% increase in Russian yields, offset by an 8% decline in Ukraine. Overall, grain production from these countries is expected to be 6% below pre-war levels, marking the second weakest year since the conflict began. This forecast suggests ongoing challenges in stabilizing grain exports and the need for strategic adjustments in global trade routes.
