Black Sea Region: 2018/19 Outlook

02.05.2018

The Black Sea region turned out to be generally prepared for the new season’s challenges. However, it made its small contribution to price support. It is only Ukraine where farmers sowed more winter crops than last year. At the same time, their plantings in the other Black Sea countries dwindled to different degrees. 

The winter conditions favored crops all over the region. In particular, Ukrainian winter crops were rated the best in four years.

This spring features a number of significant differences though.

The situation in spring crops develops as follows. It is well-known that the key factor for deciding on the allocation of areas to crops is their margins. Calculations on the basis of estimated costs, starting prices for new-crop grain and yields indicate that rapeseed is the most profitable among the six main crops this year. This pushed Ukrainian farmers to expand winter rape plantings by some 20%. Barley also showed high margin. And the choice of farmers regarding spring planting was supposedly obvious.

Another consequence of this year’s abnormally cold March is a very late start and a slow pace of seeding early spring crops in the Black Sea region. Such weather conditions may entail a shortfall in seeding of early spring crops. In addition, late crops are also to be seeded within short timeframes.

Thus, taking all of the above factors into account, UkrAgroConsult predicts a 5-6% year-on-year decrease in the Black Sea grain crop due to lower harvests of wheat and barley.

According to UkrAgroConsult’s estimates, export potential will decrease to a lesser extent – by 4% – owing to higher grain carryover, mostly in Russia.

Competition for end markets will remain within the region too despite the forecast decline in sales. With regard to wheat, it is shifting towards South-Eat Asia.

In corn, competition intensifies in both regional and global markets: Black Sea region vs South America.

Full version of the article is available to subscribers for weekly market report “Black Sea Grain” and “Online market review by UkrAgroConsult.

 

UkrAgroConsult

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