A record heatwave in July across most Ukrainian regions may reduce the 2024 corn harvest by about 6 million metric tonnes, the Ukrainian producers' union said at the weekend.
Denys Marchuk, the deputy head of the country's major agricultural producers group, the Ukrainian Agrarian Council, said the corn yield in many regions may fall by about 30% due to the poor weather.
The Ukrainian grain traders union UGA also cut their forecast last week for Ukraine's 2024 corn harvest to 23.4 million tonnes from 29.6 million tonnes in 2023 due to the heatwave.
The government is less pessimistic and the acting farm minister said last month the late crop yield might drop up to 15% in most regions.
Russia Market Interventions
Elsewhere, Russia allocated 0.5 million metric tonnes of grain from the state grain fund for market interventions in the second half of 2024 to maintain price stability and encourage farmers to sell their grain stock, the government announced on Friday.
"The decision will contribute to maintaining stability in the domestic food market," the government said in a statement.
Elsewhere, domestic grain prices in Russia peaked in June and have been steadily falling as the new harvest began. However, many farmers are withholding their stock in hopes of securing better prices later, creating price uncertainty for millers.
This uncertainty has led to a 20%-30% increase in flour prices since April, according to data from the Russian Bakers' Union. If this increase translates into the price of bread, it will further fuel inflation, which is already running at 9%.
Stabilise Raw Material Prices
"The release of grain from the intervention fund is intended to stabilise raw material prices for millers. It will contribute to at least stabilising flour prices, and possibly even reducing them," said Igor Sviridenko from the Russian Union of Flour and Cereal Enterprises.
Falling or even negative profitability of wheat production is forcing many farmers to withhold their stock, according to the IKAR consultancy. A market source told Reuters that the government's decision is also an attempt to signal to farmers to begin selling now.
