The Black Sea region is looking pretty green these days, with analysts expecting increased wheat and barley production and exports from that area.
The United States Department of Agriculture forecasts 89 million tonnes of wheat production in Russia, Kazakhstan and Ukraine, up 11 percent from last year’s total.
Exports are expected to reach 25.5 million tonnes, up 15 percent from 2007-08.
Barley production from those same three countries is predicted to be 30 million tonnes with six million tonnes of exports, up 24 and 54 percent respectively.
“We would expect them to be fairly aggressive on exports, especially since they didn’t get to export very much last year,” said Bruce Burnett, director of weather and crop surveillance with the Canadian Wheat Board.
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That will have direct and indirect consequences for Canadian wheat producers.
Russia and Kazakhstan produce spring wheat that competes head-to-head with Canadian spring wheat, although in Russia’s case, much of that good quality wheat is consumed domestically.
But most of the Ukrainian and two-thirds of the Russian crop is winter wheat, which doesn’t compete directly with Canada’s quality milling wheat. The region also produces a lot of lower quality spring wheat, comparable to its winter wheat.
Much of the winter wheat and lower quality spring wheat is exported to the Middle East and the Mediterranean basin, where it enjoys a significant freight advantage over U.S. winter wheat and has an overall price-dampening impact on wheat markets.
Fortunately, the Middle East is desperately short of wheat this year, which will help offset that impact.
Growing conditions have been good for the winter wheat crop.
Harvest is underway in southern Ukraine and momentum will continue to build over the next two to three weeks.
The spring wheat crop is in about the same stage of development as Canada’s.
“There’s a lot of uncertainty in that number yet,” said Burnett.
Barley production is up significantly from last year but it could have been even better had it not been for the strong winter wheat crop. Spring barley is often substituted for failed winter wheat.
The Black Sea region has historically been a bigger player in the barley market than in wheat because governments in that region don’t put the same export restrictions on barley supplies that they often do on wheat.
Ukraine is expected to account for two-thirds of the region’s anticipated six million tonnes in barley exports. Saudi Arabia will likely buy about 60 percent of Ukraine’s exports, with the remainder going to markets in the Middle East and North Africa. Most of the country’s exports are feed barley.
Burnett said the dramatic increase in wheat and barley output this year is the direct result of better weather compared to last year when drought hit southern Russia and Ukraine.
Winter crops have developed nicely and spring crops are off to a good start. Russia’s spring plantings finished a week ahead of normal and were sown into “very good” soil moisture, according to a USDA Foreign Agricultural Service report.
Long-term Black Sea region production prospects are also promising because of increased government investment in the industry and a range of new agricultural programs.
“It is one of the areas where we could see increased production to help stabilize global grain supplies,” said Burnett.
But he doesn’t expect the region’s future production to single-handedly quash the run-up in commodity prices. Those countries would have to produce a lot more grain on a far more consistent basis before that would happen.
