Wheat production: Ukraine a rising force

INCREASED wheat production from the Black Sea nations of Ukraine and Russia is fast becoming a key influence on the global grains market, with Russian production in particular a “catalyst” for price fluctuations, according to one industry professional.

INTL FCStone senior commodity risk manager Rory Deverell said the dominance of Black Sea wheat production was affecting major grain producing countries such as France and the US.

“We’re really getting to the point where production is the catalyst for prices,” Dr Deverell said.

“Since 2012 the market has been caught in a rip. The rip has really been caused by … the Russians. You can see the Russian share getting bigger and bigger, squeezing out the French traders.

“Russia is going to be a centrepiece for where wheat prices go from here.”

Dr Deverell, who addressed attendees at the recent Australian Grains Industry Conference in Melbourne, said in 2017 Russia produced the same amount of wheat as the US for a fraction of the cost.

“The Russian situation can have quick, sharp impacts on price and longer term effects on price.”

Ukrainian Grain Association president Nikolay Gorbachov said the young nation of Ukraine was eager to move out and away from the pressure of its Russian neighbour and double its annual wheat production.

“In Ukraine we produce about 25 million tonnes of wheat, and our domestic consumption is only about 4 million tonnes. The question is where will we export this wheat?” Mr Gorbachov said.

Mr Gorbachov said Ukraine had the potential to double wheat yields if they deployed the same technology as the rest of Europe.

 “For example, our yield for wheat is about 4 tonne a hectare instead of 8 tonne in France. On the same acreage, we can grow two times more grain,” he said.

“The biggest problem for us is poor investment in technology and irrigation. Farmers are starting to invest money in irrigation and this is how we can increase production.”

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