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Grain and oilseeds normalize, plus extreme weather

A July 22 agreement between Russia and Ukraine to unblock grain exports from major Black Sea ports came as a major relief to global grains and vegetable oils supply concerns, with the Food and Agricultural Organization (FAO) Food Price Index plunging almost 9% in July; its biggest decline since 2008. Corn prices are still 70% higher than February 2020, and wheat prices 60% higher than pre-pandemic levels.

On August 13, the first grain shipment from Ukraine since the onset of port blockades arrived at the port of Ravenna in Italy, carrying 13,000 tons of corn. Following this success, three subsequent vessels bound for Ireland, the U.K., and Turkey departed Ukrainian ports, transporting a combined 58,000 tons of corn. Despite this positive development, it is expected that most of this cargo is bound for use as animal feed and will not yet contribute to food shortage alleviation, the worst of which are hitting developing countries. Ukraine claims that roughly 20 million tons of grains remain stuck in silos and at ports, six million tons of which is wheat. Of that, only three million tons of wheat is expected to be allocated for human consumption. In any case, this gradual export resumption signals a move toward trade normalization which is expected to increase global grain supply and further stabilize prices.

Table 1: Overview of disruptions for key agricultural commodities. Green = no disruption; yellow = minor disruption; orange = moderate disruption; red = severe disruption (source: Everstream Analytics).

The resumption of agricultural exports from Ukraine has also included cargos of sunflower meal and oil. On August 17, a vessel carrying 18,500 tons of sunflower meal departed the Port of Chornomorsk, Ukraine, destined for Amsterdam, Netherlands, and a vessel carrying 7,250 tons of sunflower oil departed the Port of Odesa for Gubre, Turkey. Shortly thereafter, on August 20, another vessel was authorized to depart the Port of Chornomorsk carrying 6,300 tons of sunflower oil to Venice, Italy.  Despite these incremental improvements, Ukraine’s sunflower meal exports are still forecast to decline from 66% to 40% of the global share. Similarly, its sunflower oil exports are forecast to plunge from 50% to 35% of the global share.

Weather risks continue to impact the future availability of grain as the U.S. and Europe experience extreme heat, detrimental for corn and soybean cultivation due to their temperature sensitivities. Europe has suffered the most severe production cuts due to weather, while crop prospects in the U.S. have improved slightly due to increased rainfall forecasts in the Midwest. In both cases, annual crop output will register well below average annual volumes as the damage has already been done. Further, long-term dryness is resulting in lower water levels on the Rhine River, a vital transportation route for agricultural trade in Europe. This has left German agricultural trade particularly vulnerable, as the country relies on the river for 80% of its inland waterway goods transportation. Though there has been some recent short-term improvement, the long-term weather pattern change needed to reverse water depletion is not anticipated going into September.

map of european drought conditions
Figure 2: Temperature anomaly June 23 to August 22 (source: Everstream Analytics and Copernicus ERA5).

Palm oil

Daily losses of palm oil fruit in Malaysia remain elevated at 57,880 tons due to an acute shortage of plantation labor. Of the plantation worker deficit of 120,000, an estimated 50% are fresh fruit bunches (FFB) harvesters and collectors. Due to this shortage, MYR 10.46 billion ($2.34 billion; €2.33 billion) has been recorded in financial losses in 2022 alone. Meanwhile, Indonesia’s stockpile of palm oil fruit is expected to adequately fill the global supply gap and lead to a further decrease in palm oil market prices. It has removed an export levy for all palm oil products previously in effect until August 31 and has reached 140,000 tons of daily crude palm oil exports, up from 90,000 in July.

precipitation map for Europe
Figure 3: Percentage of normal precipitation (source: Everstream Analytics and Copernicus ERA5).


Monsoon rain deficits in northern India, a heatwave in southern China, floods in Bangladesh, and grain quality issues in Vietnam could decrease rice yields in four of the world’s top five producers. In India’s top rice producing states of Bihar, Jharkhand, West Bengal, and Uttar Pradesh, seasonal rainfall is only registering 70% of normal, and 33% lower compared to last year’s season. Any change in global rice prices due to expected yield disruptions could lead the Indian government to curb exports as it did with wheat earlier this year. Similarly, heatwaves and lack of rainfall in southern China have prompted authorities to increase rice imports to an unprecedented six million tons. In contrast, unpredictable, heavier-than-average rainfall in Bangladesh and Vietnam has damaged the quality of rice grains during harvest and led to output losses nearing 70% of some rice fields. Large rice inventories in exporting countries over the last two years have allowed the crop to so far bypass recent high food inflation. However, erratic weather patterns on either side of the extreme will likely lead to rising prices and protectionist measures in the months to come.


India has issued a clarification related to its Export Release Order (ERO) for sugar mills with high stocks of raw sugar. Sugar mills, exporters, and refineries can now export refined sugar even if their current permits are only valid for the export of raw sugar. The clarification is valid from August 17 but an expiration on the revised ERO has not been announced. Indian authorities had previously set an export cap of around one million tons of sugar for mills, though most of this related to unrefined products due to permitting limitations. As many exporters have high stocks of refined sugar sitting in port silos and warehouses, this revision is expected to facilitate the release of these products and ease concerns of global supply issues.

Everstream clients are receiving detailed information about this disruption.

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