Russia, Kazakhstan and Ukraine hold key to global wheat markets


THE declining state of the Russian wheat crop this year will not be enough to provide relief to global wheat prices.

According to, the Russian wheat crop is well below last year’s record harvest due to dryness in the south, and rain and cold delaying spring sowings in the east.

Last week, the US Department of Agriculture reduced its estimate of the Russian wheat crop by 3.5 million tonnes, to 68.5 million tonnes, and exports by 1.5 million tonnes, to 35 million tonnes.

The Chicago Board of Trade wheat futures rose US20c a bushel to 535c/bu (A$259 a tonne) when the USDA World Agricultural Supply and Demand Estimates report was released.

But the rise was short-lived, with the futures price dropping back to 502c/bu (A$248 a tonne) by yesterday.

Rabobank senior grains analyst Cheryl Kalisch Gordon said prices out of the Black Sea — Russia and neighbours Ukraine and Kazakhstan — were now just as important as the CBOT futures price.

“Certainly, for farmers looking to hedge and watching price movements globally, what is happening in the Black Sea is more and more important,” Dr Kalisch Gordon said.

Last year, Russia produced a record 85 million tonne crop. Russian production has almost doubled in the past 10 years.

USDA data shows the Black Sea countries have reasonably low wheat stocks each year — meaning they dispose of surpluses on the world market.

Global wheat stocks are 266 million tonnes — exactly 100 million tonnes more than they were 10 years ago — with more than half that in China. But Dr Kalisch Gordon said China virtually looked after its own production.

For the first time in six years, global wheat consumption is expected to outstrip production, but only marginally eat into the stockpile.

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