Ukrainian agricultural companies prepare for long-term grain storage amid port blockade

Uncertainty with sea exports is forcing Ukrainian agricultural companies to prepare for long-term crop storage. There is no overall shortage of elevator capacity yet, but some enterprises are already reporting increased demand and filled storage facilities.

At Kernel, demand for storing wheat and other early grains has increased. The company had to partially suspend grain purchasing to fulfill obligations to partners regarding acceptance and processing, reports Elevatorist.com.

Meanwhile, at the elevators of Agroprosperis in Vinnytsia region and Agrovista in Kirovohrad region, no rush has been observed yet. Market participants explain this by the fact that after 2022, farmers expanded their own storage capabilities: they built warehouses and silos, repurposed premises, and made more active use of mobile grain storage.

The situation could become more difficult in autumn if sea exports are not restored before the harvest of late crops begins. In that case, stationary capacity may not be enough to accommodate corn and other harvests.

Market participants mention polymer sleeves as the main backup option. Kernel plans to heavily transfer grain into them if customers do not free up elevator capacity by September. Agroprosperis, Agrovista and NOVAAGRO are preparing similar scenarios.

At some NOVAAGRO elevators, storage facilities are already nearly full. According to the company, storing grain in polymer sleeves costs about UAH 450 per ton when renting packaging equipment. Using own equipment can reduce costs to approximately UAH 250 per ton.

Disadvantages of this method include additional costs and the risk of grain damage by rodents. Therefore, some operators consider polymer sleeves only as a last resort in case of full static storage occupancy.

Another backup solution could be modular grain storage. Kernel has purchased three such Ukraine-made structures and is testing them in Poltava region. The company plans to assess storage costs, loading and unloading speed, as well as possible technological risks.

Farmers are also simultaneously preparing alternative export routes through the western border. At the Chornotysivskyi Terminal, customers are already booking slots for October and November for corn transshipment. Early planning will allow part of the harvest to be directed immediately for export and reduce the load on elevators.