On January 17, the European Union and the South American economic bloc Mercosur (Argentina, Brazil, Paraguay and Uruguay) signed a Partnership Agreement along with an Interim Trade Agreement, which is expected to provide unprecedented access to the South American market for European farmers and food producers. According to ProAgro Group, the agreement could increase EU agri-food exports to Mercosur by up to 50%.
At the same time, agricultural exports from Argentina, Brazil, Paraguay and Uruguay to the EU are also set to grow, increasing competition for Ukrainian agricultural products on the European market. However, the main risk for Ukrainian exporters lies not so much in the EU–Mercosur agreement itself as in the further global expansion of Mercosur, which could gradually reshape the geography of global trade flows.
The growing influence of Mercosur may reduce opportunities for Ukrainian exports in Asian markets and indirectly narrow export destinations to regions where competition is already extremely intense. This is why in 2026 market attention is focused on the EU–Mercosur deal not because Europe suddenly needs South American products, but because changes in tariff and trade rules could redirect flows, alter price spreads and reduce commodity margins across the Black Sea, Danube and Balkan regions.
Short-term risks for EU agricultural markets appear to be overstated. Even considering Argentina’s record wheat harvest in 2025 of 27.5 million tonnes (+46% year-on-year) and its strong export potential, access for Mercosur wheat to the EU market remains limited, effectively constrained by an annual quota of 180,000 tonnes and falling far short of full liberalisation.
As for corn, the EU’s duty-free import quota for Mercosur amounts to 1 million tonnes per year, but this volume will be reached gradually over six years through equal annual increases, while the EU retains the right to apply safeguard measures for up to 12 years. Under these conditions, the key competitive factors for Ukrainian corn are not only price, but also wartime and contract execution risks, freight costs and the reliability of logistics. Buyers in Spain and Italy are unwilling to pay a premium for logistical uncertainty, and in the event of disruptions at Ukrainian ports, alternative suppliers from South America, the United States or Canada may become more attractive due to their stability and predictability of supply.
This pattern is not unique to Ukraine but is also evident across the Black Sea, Danube and Balkan regions: when logistics come under pressure, importers tend to shift from the cheapest sources to those that minimise execution risks and ensure reliable deliveries.
Earlier, we reported that for Ukraine, the signing of the EU–Mercosur agreement means intensified competition on the European market from South American agribusiness giants and could complicate the sale of Ukrainian corn, meal and poultry meat.
Source: UkrAgroConsult
