Increased Ukrainian wheat flour exports to the EU

Ukraine wheat flour production reduced at the beginning of the war, but very soon the production recovered being able to meet current domestic demand and allow building up strategic stocks.

During martial law, the Ukrainian State Statistics Service does not publish flour production statistics, but exports in 2022 fell to 79 K mt (-25% from 2021). The main reason for their slump was the blockade of Black Sea ports and logistical problems on the alternative export routes. About 80 K mt of flour was exported in MY 2022/23. Exports to the EU reached 36.6 K mt, which is 437 (!) times more than in MY 2021/22.

Exports to distant markets are lower than in previous years. Problems with the formation of large export consignments pushed up flour exports by containers, which are only possible from the small Danube ports. UkrAgroConsult predicts a rise in the export of Ukrainian flour to Southeast Asia, the Middle East and Africa after all of Ukraine’s ports fully resume operation.

Currently, the EU is deciding on prolongation of the special customs regime for Ukrainian agricultural products in the Union. Its extension is expectedly to at least stabilize the flour flow to Europe. The fact that Ukrainian flour is now consumed in EU countries confirms its compliance with EU quality standards. Even if the import restrictions are restored, some of European buyers may continue buying cheaper flour from Ukraine. If so, flour producers in bordering regions, will get higher margins/profitability as for them the logistics component will not be so expensive compared to flour deliveries from Central regions of Ukraine. In addition, we can expect that continued sales to the EU will fuel further development of Ukraine’s grain processing industry and improve the flour quality.