Ukraine & Black Sea grain markets: aiming for the new highs?

Some points of Elizaveta Malyshko’s report to the Conference “Black Sea Grain 2019”

In the current season, Russia, Ukraine and Kazakhstan will export a combined some 58 MMT of wheat, or roughly 32% of its global trade volume. Following five years of uninterrupted annual growth, this marketing year will witness a year-on-year drop in exports because of lower yields in all the countries compared to a record 2017. Nevertheless, this will be the second record in the entire history, reports UkrAgroConsult.

This season is featured by the fact that despite shrinking supply, Ukraine was the only country that experienced a slowdown in exports against last year’s record until February. At the same time, Kazakhstan and Russia exported wheat even faster than last year. 8% more wheat was shipped abroad in the first half of the season than a year earlier, although the country’s export potential fell by 15%. 

Corn is not less interesting, and countries’ specialization is more pronounced here. The main player in the region is Ukraine. Although Russia reduced corn production and halved exports, the region as a whole will show record shipments this marketing year. In Ukraine, corn is also this season’s favorite. Although its planted area was mediocre, not record large, the harvest surpassed all expectations. Over 30 MMT will be exported from the region in MY 2018/19, including 28 MMT from Ukraine.

Grains showed quite high profitability this year. While wheat and barley were profitable due to high prices, corn was such because of record yields. Ideal weather conditions and good growing practices resulted in an unprecedented yield exceeding the average by 20%.

The 2019 crop outlook is now quite optimistic, and this could not but affect prices. The least decrease from the same time last year is seen in wheat prices (down USD 2-5). FOB prices for Ukrainian barley are USD 21 lower than last year, while those for corn are down USD 22 from 2018.