A new Refinitiv Special Report from our Agriculture Research Team unpacks the consequences of the June 2023 destruction of Ukraine’s Kakhovka dam, and the anticipated impact on the country’s crop production capacity.
- A new Refinitiv Special Report unpacks the impact of the June 2023 destruction of the Kakhovka dam in Ukraine.
- Direct and immediate flooding consequences include the loss of thousands of tons of corn, wheat and rapeseed, but there is also longer-term fallout to consider.
- Commodities industry participants will need to ensure that they have reliable access to up-to-date data and analytics in order to keep abreast of expected changes in crop output, both in the short and longer term.
The June 2023 bombing of the Kakhovka Dam
Amidst the ongoing turmoil in Ukraine and the undeniable human suffering that continues to unfold, our Agriculture Research Team has produced a Special Report that looks specifically at the destruction of the Kakhovka dam in Ukraine. The dam was severely damaged by an explosion on 6 June 2023.
Since the start of the Ukraine war in February 2022, ongoing conflict has significantly affected agricultural production activities in the region, but this latest disaster will have far-reaching consequences.
The European Commission reports that the dam contained “the amount of water equal to that of the Great Salt Lake in the USA”. In the immediate aftermath of the explosion, this substantial water store flooded thousands of homes and farmlands along the Dnipro River in the Kherson oblast, before washing into the Black Sea.
According to The Ministry of Agrarian Policy and Food of Ukraine (MAPFU), somewhere in the region of 10,000 hectares of agricultural land on the right bank of the Kherson region were affected – but the scale of the destruction has by no means been quantified, since many more thousands of hectares on the left bank, now under Russian occupation, may also have been flooded.
Perhaps even more worrying, the loss of water in the Kakhovka reservoir suggests that 94% of irrigation systems in Kherson, 74% in Zaporizhia and 30% in Dnipropetrovsk will now not be able to operate normally. According to Refinitiv forecasts, these three oblasts were expected to harvest 3.8m tons of wheat, 0.75m tons of rapeseed and 0.9m tons of corn in 2023.
The ripple effects of this disaster are difficult to fully quantify, but direct flooding losses are estimated at about 10,000 tons of corn, 100,000 tons of wheat and 26,000 tons of rapeseed in the Kherson oblast.
Moreover, the longer-term consequences are unknown, but suffice to say that the flooded areas may not be cultivated in the coming years. Not only this, but lack of water for irrigation – as a result of the water lost to sea – may reduce yield potential in Kherson, and neighbouring Zaporizhia and Dnipropetrovsk. This is because some irrigation systems in these oblasts rely on water supply from the reservoir.
According to the World Bank Group and the Ukrainian State Agency of Water Resources, overall irrigation coverage in Ukraine is only about 1%, but Kherson has the highest irrigation capacity (309,000 hectares), followed by Zaporizhia (50,400 hectares) and Dnipropetrovsk (29,400 hectares).
Ukrainian irrigation systems generally function with multi-level pump stations – such as the Kakhovka main pump station and secondary canal R1 on the Kakhovka Main Canal, which is supplied from the Kakhovka reservoir. With low water levels in the reservoir following the destruction of the dam, these irrigation systems will not be able to operate normally, and crop yields will consequently become more reliant on rainfall during the crop season.
Our Agriculture Research team points out that, even before the damage to the Kakhovka dam, soil moisture was a concern: at the beginning of June 2023, moisture levels were slightly below normal levels in Kherson and Dnipropetrovsk, but high deficits were recorded in Zaporizhia (106 mm below the level considered normal).
The moisture situation has only worsened since that time, as Zaporizhia set 5-year lows in soil moisture during July and August. Furthermore, the region has received almost no rainfall since early August, and nothing is in sight through mid-September. Therefore, the situation will continue to deteriorate for at least a few more weeks.
This, combined with the anticipated failure of irrigation systems as a result of the dam’s destruction, means that ongoing water shortages are likely to lead to lower wheat and rapeseed yields and production, which are currently at critical grain-fill periods – particularly in Zaporizhia, which saw soil moisture declining further in June, July and August.
Refinitiv’s September outlook suggests that rainfall could finally increase during the latter portion of September, but heat risks are likely to persist across the region. This combination, while not a worst-case scenario, also indicates that the rainfall situation will not improve drastically until at least October.
Against this backdrop, it is no understatement to say that commodities industry participants will need to keep an eagle eye on weather developments and should ensure that they have reliable access to up-to-date data and analytics.
As a leading global supplier of pricing and fundamentals across the commodities spectrum – from oil, refined products and petrochemicals, to transport, power, agriculture, weather and more – Refinitiv is well equipped to deliver the data, insights and technology professionals need to keep abreast of developments in this dynamic environment.
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