•    Major African wheat importers rely heavily on Ukraine, risking higher costs if exports are disrupted
•    Zimbabwe and Southern Africa vulnerable as they work to boost local wheat production
•    Extension of Black Sea deal critical to stabilizing Africa's wheat import prices in 2023

Ukraine recently struck a deal with Poland to resume grain exports overland after a temporary ban. While this provides a lifeline for Ukraine to export its grain, the fate of its seaborne exports from Black Sea ports remains uncertain. This has implications for major African wheat importers that source grain from Ukraine.

Ukraine is one of the top wheat exporters globally and Africa is a key market. The top five African importers of Ukrainian wheat are Egypt, Tunisia, Morocco, Sudan and Nigeria, importing a combined 5.2 million tonnes annually. For these countries, any disruption to Ukraine’s exports could drive up wheat import prices and negatively impact costs of staples like bread.

Zimbabwe, in particular, is at risk. Zimbabwe has tried to boost its wheat production to meet domestic demand but still relies on imports for 40% of its needs, with Ukraine being a major supplier. Any constraints on Ukraine’s exports could force Zimbabwe to find alternative import sources at higher prices, threatening food security. The government may have to allow private millers to increase bread prices to account for higher input costs in a country already facing high inflation and economic hardship.

While the Poland transit deal offers some reprieve, the fate of Ukraine’s seaborne grain exports from Black Sea ports under a UN-backed deal remains uncertain. Russia has not yet approved an extension of the deal, which expires in November 2022. Failure to resume seaborne exports or extend the deal would leave 18-20 million tonnes of grain trapped in Ukraine, slashing its export earnings.

For African wheat importers, they would have to scramble to replace this lost volume from Ukraine, likely at higher prices. There are constraints on wheat exports from other major suppliers like Australia, Canada and the EU. And Black Sea alternatives like Russia and Romania may not have enough spare capacity to fill the entire void left by Ukraine.
This creates uncertainty and risks for the coming year on prices and availability of imported wheat across Africa. The next few weeks will be crucial as negotiations progress on possibly extending the UN’s Black Sea Grain Initiative deal. An extension may provide assurances for importers and stabilize import prices. Failure to do so, however, could portend higher wheat import bills for African countries and consumers in 2023.

Commodities Perspective Corner is a weekly publication focusing on general commodities from Agriculture, Energy to Metals. The column seeks to highlight global developments narrowing down their impact on the local economy and vice versa.