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Russia’s invasion of Ukraine disrupts vegetable oil and grain trade

Posted by Eduardo Moreno

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The Russian invasion of Ukraine has disrupted the vegetable oil and grain trade with key ports shutting down and vessel movements blocked, according to a report by S&P Global Platts.

Agricultural commodity prices spiralled on 24 February following the invasion, which was preceded by a month of tension in the Black Sea region that had led to volatile prices of key grains, according to the report.

Prices for wheat, corn, oilseeds and vegetable oils rose sharply on 24 February as traders responded to the increased likelihood that invasion and war would cause major disruption to supplies from Black Sea ports and other routes, AgriCensus wrote yesterday.

As both Russia and Ukraine are important players in global trade flows of grain and vegetable oil, rising uncertainty in the region around port closures and blockages on vessel navigation was expected to keep prices of commodities such as sunflower oil, corn and wheat elevated in the short term, according to S&P Global Platts. The supply chain disruption could lead to a further rise in food inflation.

Sunflower oil shipments from Ukraine and Russia were halted following the news of bombings in Ukraine, with buyers finding it difficult to track their orders, trade sources told S&P Global Platts, while some Indian buyers with stuck cargoes were looking to book alternative shipments to meet their requirements.

Following Russian’s invasion, US agribusiness giant Bunge said it had temporarily suspended its Ukraine-based operations at processing facilities in Nikoalev and Dnipro, and the company offices were closed across the country, AgriCensus wrote.



Bunge said it employed 1,000 people in Ukraine at two processing facilities and grain elevators in different parts of the country, as well as a grain export terminal in the Mykolaiv commercial seaport.

“Bunge’s highest priority and primary concern is for the safety of our employees. We remain in constant contact with our teams and we will continue to follow developments and take all appropriate actions to protect our employees and our business in the country,” the company said in an emailed statement.

“The company will work to minimise any impact on our supply chain,” the company added.

Bunge said it also operates a dry corn milling facility in the Vinnytsya region, southwest of the country's capital Kyiv, through a joint venture with the Dacsa group.

Ukraine is the world's largest producer of sunflower oil followed by Russia, according to S&P Global Platts, with the two countries accounting for 60% of global production in 2020/21. Ukraine produced 5.9M tonnes of sunflower oil in 2020/21, while Russia's production reached 5.1M tonnes.

Russia and Ukraine are also key exporters of wheat, with both accounting for a combined 23% of global wheat trade in 2021-22 marketing year, according to the US Department of Agriculture (USDA).

Ukraine is also one of the world's largest corn exporters, representing 16% of 2021/22 marketing year's total global corn exports and concerns are emerging that shipments from the country could be disrupted by the invasion impacting global corn supplies, according to S&P Global Platts.

Source: Oils & Fats Internacional (OFI)