Africa may struggle to replace Ukraine’s wheat supplies

Disrupted wheat supplies from Ukraine are putting large African grain importers at risk of grain shortages in the new 2022-23 marketing season, with the possibility that other major wheat exporters will not be able to replace missing Ukrainian deliveries.

Ukraine has gradually ramped up wheat shipments to African countries since 2019, owing to rising quality of Ukrainian product. About 6.26mn t of Ukrainian wheat was exported to Africa in the 2021-22 marketing year (June-July), accounting for nearly 12pc of African wheat imports.

Egypt was the largest buyer, having purchased about 2.82mn t, followed by Tunisia and Morocco with 634,000t and 596,000t, respectively. About 466,000t and 462,000t of Ukrainian wheat were shipped to Ethiopia and Algeria, respectively. Nigeria significantly increased wheat imports from Ukraine last season to 259,000t from just 81,000t in 2020-21.

But since the start of the Russian invasion of Ukraine on 24 February, sea exports from Ukraine have stopped and African countries have lost access to Ukrainian agricultural supplies. Countries across the continent have faced wheat supply shortages and soaring prices for product.

If the situation does not change, African countries will have to find alternative wheat suppliers in the 2022-23 marketing season. This comes amid rising wheat import forecasts for north and sub- Saharan Africa in the new season at 55.8mn t — the highest since at least 2011-12 and up from 52.8mn t estimated for 2021-22. The higher expected import quantities are driven by dry weather conditions in most north and sub-Saharan African countries, which has lowered domestic production prospects, the US Department of Agriculture (USDA) said (see chart).

Russia, Canada and the EU seem to have the greatest prospects for increasing their wheat exports to Africa in the 2022-23 season, but Argentinian, Australian and Kazakh wheat exports to the continent are unlikely to rise because of lower or unchanged production potential this season. The US could increase wheat shipments to Africa as it has large stocks, but most of its deliveries are likely to be done through food aid programmes (see chart).

Russia is one of the largest wheat exporters to Africa and covers about 32pc of the continent’s wheat consumption. Russia exported about 10.8mn t to Africa in 2021-22, with Egypt being the largest buyer of Russian product at about 6mn t. Nigeria imported about 912,000t, followed by Sudan with about 731,000t. Algeria, Libya and Kenya were also among major Russian wheat importers, receiving about 540,000t, 448,000t and 447,000t, respectively.

Given the bright outlook for Russia’s 2022-23 wheat production, the country could potentially take Ukraine’s share in the African market. But sanctions and disrupted supply chains, coupled with higher insurance and freight costs, could prevent Russia from achieving this.

Some western-oriented African countries — which support the sanctions — may refrain from receiving Russian imports, while others may import Russian wheat despite the sanctions or unclear grain origin — some wheat may be delivered to Africa from Ukrainian territories that are temporary occupied by Russia.

African importers could face low quality wheat from Russia this season, as the country’s bumper crop is likely have lower protein content. Russia is offering more 10.5pc or 11.5pc protein grade products, rather than the usual 12.5pc, market participants said.

Canada has good prospects for ramping up its wheat shipments to Africa this season following an expected rebound in exports to 25mn t from 15mn t in 2021-22. This is because of higher expected production of 34mn t, under USDA estimates.

According to the Canadian Grain Commission, wheat exports from Canada totalled 9.5mn t in July 2021-May 2022, with about 940,000t shipped to African countries, compared with about 2.15mn t in 2020-21.

Given higher export supply availability this season, Canada can reclaim its share in the African wheat market, primary among west African countries such as Nigeria and Ghana.

The EU-27 countries could also increase their wheat supplies to African countries, which accounted for about 60pc of the bloc’s overall soft wheat shipments in the 2021-22 season. Algeria, Egypt, Nigeria and Morocco were the biggest buyers, having purchased 4.8mn t, 2.8mn t, 2.2mn t and 1.97mn t, respectively, in July 2021-May 2022.

Despite the European Commission pegging the bloc’s 2022-23 soft wheat production at 125mn t, down from about 131.1mn t last year, exports are projected to reach an all-time high of 38mn t.

France’s projected soft wheat exports outside the EU could reach a three-year high of 10.3mn t in 2022-23, according to agricultural and sea products agency FranceAgriMer. The product could be in high demand, especially from Morocco and Algeria — major importers of French wheat.

Even if other exporting countries will be able to substitute Ukrainian wheat supplies to Africa, African imports could still be pressured by high prices for the 2022-23 crop, with wheat prices having soared by around 45pc as a result of the supply disruption, according to the African Development Bank.

Egyptian state-run grains agency GASC paid about $159-169/t more for wheat in its tender on 29 June 2022 — $429.90-439.80/t cfr compared with $270.78/t cfr in a tender on 28 June 2021.

But wheat supplies available for export from EU countries — Egypt’s traditional wheat sources — are already limited because of large volumes booked by global importers before the 2022-23 season started. This is confirmed by GASC’s latest tender, which excludes wheat of European and Black Sea origin and invites offers only from Australian, Brazilian, Argentinian, Canadian and US wheat exporters, as well as the state buyer’s wheat purchases through private enquiries, which are unusual practices.

Africa wheat imports mn t

Major wheat exporters mn