Romania faces an unprecedented situation where the wheat production of 9 million tons, overburdened the it’s infrastructure at a time when the EU relies on it for it’s food supplies.
In economics, overproduction, oversupply, excess of supply or glut refers to excess of supply over demand of products being offered to the market. This leads to lower prices and/or unsold goods along with the possibility of unemployment.
Russia will dominate the global wheat market for the third year in a row, with high exports and low prices. Ukraine is severely affected by the war, as are the EU and Romania
World wheat exports will reach a record 205 million tonnes in July 2022/2023, which will begin in July.
It’s one bad situation stacked on top of another. Geopolitical shocks like Russia’s attack on Ukraine fall upon a global food system already wobbling from climate change.
Both demand and prices are rising, leading major exporters to prioritize large export reserves. The big winner will be Russia for the third year in a row, taking advantage of the large production but also the unavailability of Ukraine, one of the largest exporters in the world, to supply the world.
Russia could export 6 million tons more than in this marketing year, given that production allows it, and prices are the lowest in the market and increase very easily monthly.
The supply and demand are two sides to the same coin, excess supply is only relative to a given demand, and insufficient demand is only relative to a given supply, and thus this is considered an overproduction and under-consumption equivalent.
Russia is gaining ground on the world wheat market, plagued by rising prices, the situation in Ukraine and weak production in countries such as Australia, Argentina and India.
Despite export taxes and quotas imposed by the Kremlin, Russia could deliver on the market – years : 2022/2023 (July 2022-June 2023) approximately 39 million tons of wheat, out of a total global export volume of 205 million tons, shows the latest forecast made by the US Department of Agriculture (USDA).
The quantity is 6 million tons higher than it is estimated that Russia will export in the current trade year which will end soon. In the 2020/2021 marketing year, Russia exported around 40 million tonnes of wheat, which pushed the state to the top of the world’s wheat exporters rankings ahead of the EU.
Russia is expected to be the largest exporter for the third year in a row, due to higher harvests and strong global demand for affordable wheat, given that exports in Ukraine are reduced.
Ukraine is currently unable to export through seaports due to the ongoing war, but is trying to use alternative routes, mainly by rail and export through neighboring European countries.
The European Union is expected to be the second largest exporter, reflecting a larger harvest from France, Romania and Germany, as well as growing demand from sub-Saharan Africa and the Middle East markets, ” according to USDA analysts.
“Our report demonstrates that climate change—including increases in hazards such as flooding, drought, or cyclones—is already affecting food systems, and particularly in vulnerable regions” like Sub-Saharan Africa and Central America, said Rachel Bezner Kerr, a professor in the Department of Global Development at Cornell University and a lead author on the report’s chapter on food systems.
But while people living in nations near the equator will take the worst of the effects—a gaping injustice, given that they have contributed far fewer greenhouse gas emissions than their peers in the global north—“no one is spared from climate change impacts,” Bezner Kerr says.
Here in the United States, ever fiercer droughts and floods are already wreaking havoc in our two most productive farming regions, California’s Central Valley and the Midwestern corn belt.
The institution estimates that Ukraine will deliver only 10 million tonnes of wheat in the 2022/2023 trade year, 9 million tonnes less than in this war year, which was also affected by the war and halfway through 2020/2021 when Ukraine exported 21 millions of tons.
“With a significantly lower yield and current restrictions on direct shipping, exports will be made largely by rail to neighboring countries.”
The drought in Western Europe, in countries such as France and Germany, where large food exporters are concentrated, are affected by the war in Ukraine.
India is the second largest producer in the world and a large consumer, as well as in other parts of the world, puts a unprecedented pressure on smaller states and producers.
Romania, has now become an important part of the system and the blockades caused by the Russo-Ukrainian war also contribute to the situation.
Romania’s challenge in 2022 is to use the port of Constanta, not only for the export of domestic production, but it is also a corridor for the passage of grain from Ukraine, whose ports on the Black Sea and the Sea of Azov are blocked due to the war.
Transport Commissioner Adina Valean said at the end of last week that “20 million tonnes of grain must leave Ukraine in less than three months using EU infrastructure”.