Black Sea region in world grain trade and problematic aspects of development

The research objective is an analysis of the participation of the Black Sea Basin countries (Ukraine, Russia, Kazakhstan, Bulgaria and Romania) in world grain trade. We started this research before the start of Russia’s military actions in Ukraine, and completed it during these actions, so we have a vision of the situation before and after start of war. Subject of research: stability of grain supplies (wheat, corn, barley) from the Black Sea region as a whole and from some of its countries. Results of the research: The research revealed the growing role of the Black Sea region in the pre-war period in the world grain market and identified its key leaders. The share of the Black Sea region in world trade in wheat increased to 34%, barley – to 40,6%, corn – to 25,3% in 2019/2020 marketing year. The calculated coefficients of variation confirmed the decrease in the scattering of grain exports in 2015-2020 vs. 2010-2015, which indicates an increase in stability and reliability of supply in this period. The situation changed radically after the Russian invasion of Ukrainian territories. The maritime logistics corridors of Ukraine that is the one of the key players in this region, were blocked and started working only five months later, but not at full capacity. All these events had its destructive consequences for world trade, in particular, the increase in world prices, disruption of the stability of grain supplies from the Black Sea region and the destruction of established logistics corridors, etc.


Introduction
The global problem of the modern world is the prospect of lack of food resources for the ever-growing population of the globe.International organizations (FAO, IFAD, UNICEF, etc.) warn that before the COVID-19 pandemic, 690 million people didn't receive enough food, i.e., 8,9% of the world's population, and the continuation of this trend could lead to an increase in malnutrition up to 840 million tons in 2030 [1].Thus, the problem of food shortages will only deepen in the near future.
A logical question arises, which countries will be able to provide the growing needs of the world in food?Therefore, the research is devoted to the study of the role of the Black Sea region in world grain trade.
This article is structured as follows.The first section focuses on the relevance of this topic.The second and third sections present a review of the literature and methodological approaches to solving the tasks.The fourth section demonstrates the results of researches, namely analyzes the place and role of the Black Sea region in world grain trade (wheat, corn, barley), assesses the stability of grain supplies from this region as a whole and its individual countries, individual 1254 (2023) 012128 IOP Publishing doi:10.1088/1755-1315/1254/1/012128 2 aspects of the impact of the war on world prices were analyzed, a SWOT analysis of Ukraine's competitive positions on the world grain market was carried out.The fifth section summarizes this research and identifies areas for further research.

Literature review
With the strengthening of the role of the Black Sea region in world trade in the last 10 years, it was published scientific papers which illuminate the behavior and pricing policy of exporting countries in this region.However, the export policy of individual countries (Ukraine, Russia, etc.) is illuminated more often and its cumulative influence on world trade is analyzed less often.
In particular, Götz et al [2] analyze the negative influence of export restrictions in 2007-2008 on the domestic grain market of exporting countries of Ukraine and Russia and its integration into the world market.However, many changes have taken place since then, with some countries abandoning 'manual' methods of regulation and others abandoning them altogether.In the long term, the regulation of grain exports should be reduced mainly to a system of economic measures, but at the moment, government participation is necessary as a driver in the development of production and logistics infrastructure [3].
One of the conclusions of Svanidze and Götz [4] is the following: unforeseen policy interventions for grain markets further increase the level of grain market uncertainty and, hence, costs of grain trade in Russia.At the same time, the authors consider the increase of spatial market efficiency of grain markets in Russia as the driver of increasing the country's export potential.Together, the conducted study of the state of Russian transport capabilities has revealed the lack of development of the latter, especially railway transport and grain transshipment capabilities in seaports, which prevents an increase in the volume of grain exports to strategic foreign partners [5].
Ukraine doesn't apply strict restrictions and prohibitions, there is a fairly democratic Memorandum of Understanding between the relevant ministry and economic entities -grain exporters and there has never been a 'manual' restriction of exports.One of the main problems in the export of Ukrainian grain is a high share of logistics costs, which reaches 35% of the final cost of production [6].
Some scientists believe that over the last two decades, the Black Sea region developed to be a key global exporting region for corn and wheat [7].We fully agree with Heigermoser et al, who note that many market participants grapple with insufficient knowledge of factors that drive Black Sea spot prices, while effective futures markets that could facilitate price discovery and risk management are still missing.That's why these factors need more profound study.
Among recent studies, the scientific work of Gafarova et al [8], which examines the price behavior of the main exporters of wheat from the Black Sea region (Ukraine, Russia and Kazakhstan), identifies importing countries in which price discrimination is applied and countries where perfect competition does not allow it.In Goychuk et al [9] were performed tests of market price co-integration (Johansen maximum likelihood test and residual-based tests) as well as threshold error correction techniques were performed for this purpose.The results suggest that Russian wheat prices were co-integrated with EU and U.S. Ukrainian wheat prices were found to be co-integrated with French wheat prices only.
The countries of the Black Sea region have not escaped illicit financial Flows in export operations with agricultural products.The unstable state of the economy of these countries has led to significant financial losses in grain exports [10].The authors' main contributions are discovered asymmetry of mirror data such as price, trade value and weight of Ukrainian grain.
China has become an increasingly important actor in the Black Sea Region (BSR), and this looks set to continue in the future [11].According to the author, potential Ukrainian economic growth suggests that Kyiv has the potential to be a key driver in increasing maritime trade and future investment by China in the BSR.In fact, this is exactly what happened before the war in Ukraine.After February 24, 2022, significant transformations took place with the stability of the supply of grain and other agro-food products from this region.
There is a great deal of uncertainty about the impact of the war on food security is recognized by most experts and scientists, including Berkhout et al [12], Glauben et al [13], as it is not even possible to foresee the end date of the war.
However, it is clear that food security in certain regions of the world today is a significant threat [14,15].The war in Ukraine is likely to have the greatest impact on regions that depend on imported wheat, particularly from Russia and Ukraine, as a key part of their diets.Even countries that are less dependent on wheat imports from the Black Sea region could face food security issues, as designated by Glauben et al [13].
FAO warns: 'In the short term, the alternatives to falling exports from Ukraine and Russia seem limited.For example, according to the FAO, wheat and maize harvests in Canada and the US have been disappointing, Argentina is applying export restrictions to combat domestic inflation, and Australia can no longer deliver owing to logistical bottlenecks' [14].

Data and methodology
Time series, arithmetic averages, the method of expert assessments, extrapolations, etc. were used to assess the influence of the Black Sea basin countries on world trade.
The methodological approach involved the calculation of scattering indicators in sales of goods for the selected interval relative to the arithmetic mean sales of this good for the selected period of time to analyze the stability of export deliveries.
σ -the standard deviation x i -the number of sales of good per interval n -number of intervals x -arithmetic mean The arithmetic mean is determined by the formula: We needed the standard deviation to calculate the coefficients of variation, which more accurately characterize the scattering and reflect the stability of export supplies in the selected time interval.
V = σ x V -the coefficients of variation σ -the standard deviation x -arithmetic mean For data extrapolation, the exponential smoothing method was used, which is the most effective when developing medium-term forecasts.
U t+1 -predicted indicator t -period preceding the forecast t + 1 -forecast period α -smoothing parameter y t -actual indicators for the period preceding the forecast period U t -exponentially weighted average for the preceding period predictive The Delphi method is used to develop the SWOT matrix.The Delphi method relies on experts who are knowledgeable about a certain topic so they can forecast the outcome of future scenarios, predict the likelihood of an event, or reach consensus about a particular topic.For our research, expert opinion was obtained from farmers who are members of the PU 'Agrarian Union of Ukraine'.
The information database of our researches was the data of UN Comtrade [16], The Foreign Agricultural Service (FAS) of United States Department of Agriculture [17], and AgriSupp of the consulting agency UkrAgroConsult [18].

Black Sea region in world grain trade: before war
Research has shown that the key players in world grain trade from the Black Sea region were such countries: Ukraine, Russia, Kazakhstan, Romania and Bulgaria.All these countries (except Kazakhstan) have access to international waterways, its own ports and port elevators, the number of which has been increasing in recent years.Kazakhstan is located within the continent and away from sea routes, so the logistics of this country to the Black Sea and Azov ports runs through the territory of Russia [19].
A growing trend is still evident despite of fluctuations in export volumes.Manufacturers and exporters received more income from the sale of products for export.Governments have also realized the undeniable benefits of receiving dollar-denominated export earnings, so it is now prudent to impose any export restrictions and the situation described by Götz et al [2] is no longer repeated.Calculations based on AgriSupp [18] and FAS [17] data show that the share of the Black Sea region in world wheat trade increased from 13,2% in the 2010/2011 marketing year (hereinafter -MY) to 34% in 2019/2020 MY, corn -from 7,9% to 25,3%.The share of the Black Sea region in world barley exports, on the contrary, decreased from 47% in 2010/2011 MY to 40% in 2019/2020 MY.
The countries of the Black Sea basin competed with each other, so there are leaders in the export of certain crops.Russia was the leader in wheat exports with a share of 52,1% of the total sales of wheat from the Black Sea region in 2015/2020 -2019/2020 MY (figure 2).

Wheat
Corn Barley 0 Ukraine was the undisputed leader in corn exports, with a share of 67,2%.The share of barley sales in Ukraine and Russia is approximately at the same level -37% and 38% of the total export of barley from the Black Sea region, respectively.
The issue of stability of supplies from this region is relevant with the strengthening of the role of grain-exporting countries from the Black Sea basin.Naturally, deviations in the time series were quite significant in the period of 10 years (2011-2020) (table 1), because during this period there was a significant increase in supplies of wheat and corn from the Black Sea region to the world market, as well as fluctuations in barley supplies.However, it is important to understand whether the fluctuations of export indicators in recent years are equalizing.Is the Black Sea region able to ensure the achieved high rates of exports?How reliable is the region as a key supplier of grain resources to the world market?It should be noted that, the Black Sea countries tried to maintain the image of reliable suppliers of grain on the world market in 2011-2020, learning some lessons of failed 'manual' management, which traditionally ended with losses for business and the state budget.
We calculated the coefficients of variation with a breakdown of the time series at intervals of 5 years.Russia showed the largest fluctuations in the export of wheat, corn and barley -62-69% in the first five-year period (2011-2015), (table 1, figure 3).Grain supplies from other countries of the Black Sea basin are also not stable: the variability of indicators from year to year is significant, on average 30-50%.
The scattering of indicators decreases significantly -by 1,7-2,7 times in the second five-year plan (2016-2020).The highest level of variation in grain exports from the Black Sea region in 2016-2020 remains for corn -19.2% (table 1, figure 3).The highest deviations in the supply of corn to the world market are shown by Bulgaria -38,1% and Romania -33,1%, while Ukraine and Russia have a variation rate of 24,5-24,8%, that shows more stable supplies from these countries.
The rate of variation for wheat from the Black Sea region is quite moderate -an average of 13,9%, with slightly higher rates of variation in Russia, Ukraine and Kazakhstan -16,0-16,9%.Kazakhstan and Bulgaria stand out for barley (30,0-31,9%), while Ukraine and Russia had a moderate variation (12,3-18,9%).The coefficients of variation for the countries that are key exporters of the respective type of grain (wheat, corn, barley) were calculated for comparison.It turned out that the most stable suppliers of wheat to the world market were Canada and USA in 2016-2020, its coefficients of variation are in the range of 6,7-10,2% (table 1).Stable supply of corn is provided by the USA with a coefficient of variation of 11,1%, while Brazil and Argentina have the same variation of export indicators as Ukraine and Russia (23-25%).Ukraine shows the lowest scattering of export indicators for barley -11,1% and the EU 13,0%, other countries have a significant variation of indicators (> 20%).
The influence on export supplies of various factors should be investigated in more detail to increase the stability of grain supplies from the Black Sea region to world markets, so as gross duties, transitional grain balances, exchange rate fluctuations, export restrictions, imperfect logistics, etc.These issues will be the subject of our further researches in the future.
Thus, the calculations allow us to state that the export activity of the countries of the Black Sea region gained more and more efficiency and stability in the studied period (2011-2020), which indicates the constant development of international relations between the countries that are suppliers and buyers of grain in the Black Sea region.
According to the long-term forecast of the International Grains Council (IGC), world grain trade will grow by 1,3% annually over the next few years.This expansion will be due to increased demand for grain in Asia and Africa because of 1) population growth and increasing popularity of grain and flour products 2) increasing demand for grain crops for feed purposes.Whether these forecasts will come true, taking into account the significant destruction of logistics chains in the Black Sea region, is an open question.

The impact of the war in Ukraine on trade and world prices
Ukraine held a leading position not only among exporters of the Black Sea region, but also among world exporters before the beginning of the war.Even in the 2021/2022 marketing year, it still managed to take fifth place among wheat exporting countries, third place among barley exporting countries and fourth place among corn exporting countries.The majority of Ukrainian products were exported by sea.The country had almost 3,000 kilometers of sea coast with 18 active ports, including 5 in the occupied Crimea.About 90% of Ukraine's grain export volume passed through sea corridors.
The invasion of Russian troops on the territory of Ukraine led to significant destruction of infrastructure facilities, including logistics chains.The presence of Russian troops in the Black Sea ports of Ukraine paralyzed the export of Ukrainian grain, oil, meal, etc. for five months.The established connections, which were built up over the years, were destroyed, and only starting from August 2022, the so-called 'grain corridor' became to operate that was only partially able to unload grain-filled elevators in Ukraine.
Immediately after the start of Russia's armed attack on Ukraine, agricultural markets around the world were shocked.Commodity prices flew up.In a situation of uncertainty, the demand for products increased, because market participants did not understand what could be expected in the near future.The volatility of wheat prices was higher than for other crops, because it is a food crop that is consumed by the population of the whole world.Futures for American wheat on the CME jumped by 60% compared to the pre-war period (figure 4).Futures prices for US corn also rose, but to a lesser extent -there are by 35%.
We cannot agree with the opinion of the authors Glauben et al [13]: "Currently there is no reason to panic buy or increase export controls on world grain markets in the coming marketing year, as markets appear to be calming".
In November 2022, wheat prices were 32% higher compared to the same period last year,  corn prices were also 26% higher.The world's temporary stocks of wheat are decreasing.Thus, as of November 2022, the indicator of the ratio of temporary stocks of wheat to its consumption calculated by us was 34.1% in the 2022/2023 marketing year (figure 5).Although this is not a critical level, it is the lowest level in the last 8 years [20].A decrease in global wheat stocks will push prices higher in the future.The inverse correlation between the level of prices and the level of product reserves was proved as early as the 17th century by the English economist Gregory King, who, using the example of the corn market, calculated the proportions of the correlations: the fall in the harvest and the corresponding increase in prices.In economic science, such a cause-and-effect connection was called the 'King effect' [21].The reduction of reserves in the current marketing year will lead to another increase in exchange quotations for grain crops [22].
In 2022, Ukraine lost 30% of its wheat crop (−8 million tons), and 17% of its barley crop IOP Publishing doi:10.1088/1755-1315/1254/1/01212810 (−1,1 million tons).In the fall of 2022, it was possible to sow only 61% of the wheat and 69% of the barley areas.That is, the capacity of the Ukrainian agricultural sector has significantly decreased.It is expected that 42% less Ukrainian wheat will be exported in the 2022/2023 marketing year than in the 2021/2022 marketing year [20].The loss of grain export volumes from Ukraine will increase world prices in the future.This increase in prices will especially hurt poor countries, which are geographically and economically profitable to buy Ukrainian grain.Consider the competitiveness of Ukraine in the world grain market under the conditions of Russia's military aggression.For this purpose, a SWOT matrix has been developed, which highlights Ukraine's competitive position on the world grain market (table 2).• Military and political instability due to Russia's military actions against Ukraine • The critical environmental situation in the war zone and other regions subject to shelling and bombing.In the post-war period, it will take years to restore disturbed ecosystems, in particular to restore soil fertility.
• The activity of the operation of logistics routes in the Black Sea depends on international agreements (it is about the operation of the "grain corridor") • Continuation of the war may lead to further reduction of grain production in Ukraine • Global climate change, which is reducing (moving to the North) the area of favorable agriculture The SWOT analysis shows that Ukraine has enough strengths and opportunities to expand grain supplies for export.All these opportunities will be realized under the conditions of the most outstanding end to the war and the restoration of normal business activities in the country.
Russia's aggression against Ukraine also threatens global food security [23].The problem of hunger in the world and the tendency to increase the population on the planet is the reason that should motivate international organizations and individual countries to help Ukraine in restoring its vitality and restoring the stability of export grain supplies to the world market and, accordingly, the sustainability of the development of the Black Sea region.

Conclusions and outlook
So, research has shown an increase in the share of the Black Sea region in the supply of grain to the world market before Russia's military invasion of Ukraine.Thus, the countries of the Black Sea basin have provided a third of world wheat exports, a quarter of world exports of corn and 40% of barley on average in 2016-2020.The leaders of this region were Ukraine and Russia.With less experience than traditional players in the international market, the Black Sea countries have shown a fairly steady development of grain export trade in recent years, as evidenced by our calculated coefficients of variation.Thus, comparing the uniformity of grain supply to the world market in 2016-2020, we found that the Black Sea basin provided a higher level of stability of wheat exports than the EU and Australia and the stability of corn supplies from this region at the level of Argentina and Brazil.The most stable suppliers of corn to the world market were the United States, wheat -Canada and the United States, barley -Ukraine.The indicators which were calculated by us confirm the increasing efficiency and sustainability of the development of the Black Sea region in the pre-war period.However, the war started by Russia, destroys the established economic relations between the countries, blocks the arrival of crops from Ukraine, while some countries are in great need of these products.
Because of the complete or partial blockade of Ukrainian ports, the world market did not receive a significant part of the products, which had influence on world prices.With the beginning of the armed aggression, stock exchange quotations for wheat and corn jumped by 60% and 35%, but even after 8 months from the start of the war, they still exceed last year's level, by 32% and 26%, respectively.
Regarding the prospects for the development of export trade from Ukraine: the results of the SWOT analysis confirm the sufficient competitiveness of country.However, a significant number of threats are also present.The best solution to this issue and the elimination of most "threats" is a complete cessation of hostilities and the withdrawal of troops from Ukrainian territories and waters.The restoration of full-fledged business activity of Ukraine, as one of the key players in the world grain market, will allow to restore the sustainable development of world trade and global food security.

Figure 2 .
Figure 2. The share of individual countries in the Black Sea region in exports of wheat, corn and barley, on average over the past 5 years (2015/2016 -2019/2020 MY), %.

Figure 3 .
Figure 3. Coefficients of variation of export supplies of grain from the countries of the Black Sea region, 2011-2015, 2016-2020, %.

Figure 4 .
Figure 4. Chicago Board of Trade Wheat and Corn Price Growth Rates, November 2021 -November 2022.

Table 1 .
Coefficients of variation of grain exports from the Black Sea region and individual leading countries, 2011-2020, %.

Table 2 .
SWOT analysis of competitive position of Ukraine on the world grain market.