Will the Black Sea region surprise the wheat market again in the marketing year 2018/19?
In recent years, Russia and Ukraine have achieved one record after another in grain production. What is the reason for the huge increase in grain production? Are further increases expected?
Since the late 1990s, there has been a steady upward trend in yields in Ukraine and Russia. Today, both countries are among the largest grain exporters in the world. Russia currently holds the title of the world's largest exporter. In the 2017/18 season, Russia produced 85 million tons of wheat and Ukraine produced 27 million tons of wheat.
The main reasons for the rapid development are larger investments in the agricultural sector, land privatization, the creation of so-called agrarian holdings with the result of greater investment in technology, better seed and more efficient crop protection, fertilization and irrigation. In addition, but also had luck with good weather at the right time.
The Ukrainian economy and the agricultural sector stabilized after 2014, leading to more investment in cereal crops.Now agriculture is growing into the leading sector of the Ukrainian economy, especially in terms of exports. Closer cooperation with the EU and more effective legislation make Ukraine more interesting to domestic and foreign investors. At the same time, the development of the agricultural sector by the state is limited due to the lack of state resources. In addition, agriculture in Ukraine is suffering from a lack of long-term financing. The agricultural land moratorium inhibits economic development. After Ukrainian independence in 1991, about 27 million hectares of agricultural land were privatized and transferred to nearly seven million employees of the former agricultural state enterprises. However, full exercise of ownership is still not possible - the corresponding moratorium on land purchase is regularly extended. Farms therefore work almost exclusively on leased land.
Despite these challenges and improvements in agricultural technologies, better inputs (such as seeds and fertilizer), good weather conditions during sowing, mild winter and the hitherto cold spring, Ukraine expects yields at national level of 4.05 tonnes per hectare for 2018 / 19th For the time being, and under normal weather conditions in spring and summer, it would appear that Ukraine could once again surprise the market.
Last year's record wheat harvest in Russia, greater export potential, better agricultural technologies and a relatively stable exchange rate between foreign currencies and the Russian ruble mean high gross wheat revenues. Taking into account crop trends, gross yields, sowing conditions in autumn, mild winters and assuming good weather conditions in spring and summer, production can keep up with the record of last year and reach 84.3 million tonnes. Domestic yields in Russia are estimated at 2.7 tonnes per hectare. This includes winter wheat yields of 3.87 tonnes per hectare.If the weather conditions develop optimally, yields of 3.2 tonnes per hectare could be achieved. Such a return would be another record.
In recent years, Russia and Ukraine have achieved one record after another in grain production. What is the reason for the huge increase in grain production? Are further increases expected?
Since the late 1990s, there has been a steady upward trend in yields in Ukraine and Russia. Today, both countries are among the largest grain exporters in the world. Russia currently holds the title of the world's largest exporter. In the 2017/18 season, Russia produced 85 million tons of wheat and Ukraine produced 27 million tons of wheat.
The main reasons for the rapid development are larger investments in the agricultural sector, land privatization, the creation of so-called agrarian holdings with the result of greater investment in technology, better seed and more efficient crop protection, fertilization and irrigation. In addition, but also had luck with good weather at the right time.
The Ukrainian economy and the agricultural sector stabilized after 2014, leading to more investment in cereal crops.Now agriculture is growing into the leading sector of the Ukrainian economy, especially in terms of exports. Closer cooperation with the EU and more effective legislation make Ukraine more interesting to domestic and foreign investors. At the same time, the development of the agricultural sector by the state is limited due to the lack of state resources. In addition, agriculture in Ukraine is suffering from a lack of long-term financing. The agricultural land moratorium inhibits economic development. After Ukrainian independence in 1991, about 27 million hectares of agricultural land were privatized and transferred to nearly seven million employees of the former agricultural state enterprises. However, full exercise of ownership is still not possible - the corresponding moratorium on land purchase is regularly extended. Farms therefore work almost exclusively on leased land.
Despite these challenges and improvements in agricultural technologies, better inputs (such as seeds and fertilizer), good weather conditions during sowing, mild winter and the hitherto cold spring, Ukraine expects yields at national level of 4.05 tonnes per hectare for 2018 / 19th For the time being, and under normal weather conditions in spring and summer, it would appear that Ukraine could once again surprise the market.
Last year's record wheat harvest in Russia, greater export potential, better agricultural technologies and a relatively stable exchange rate between foreign currencies and the Russian ruble mean high gross wheat revenues. Taking into account crop trends, gross yields, sowing conditions in autumn, mild winters and assuming good weather conditions in spring and summer, production can keep up with the record of last year and reach 84.3 million tonnes. Domestic yields in Russia are estimated at 2.7 tonnes per hectare. This includes winter wheat yields of 3.87 tonnes per hectare.If the weather conditions develop optimally, yields of 3.2 tonnes per hectare could be achieved. Such a return would be another record.
Source and graphics: Reuters
