Reference Date: 16-October-2017
Cereal production in 2017 estimated at record level
Cereal exports set to reach record high in 2017/18 marketing year
Prices of wheat declined since August
Cereal production reached record level in 2017
The 2017 aggregate cereal production (winter plus spring crops) is estimated to surpass the high level obtained in 2016 by about 12 million tonnes. The increase is mainly due to the record high wheat output, which is estimated at 84 million tonnes. This estimate has been revised upward since the start of the season mainly on account of favourable weather conditions during the summer months that boosted yields. Barley output is also estimated to increase by 11 percent to 20 million tonnes in 2017 as a result of larger plantings. By contrast, maize production is expected to decline from the record level of the previous year and is now forecast at 14 million tonnes. The current forecast of maize production has been revised downward by 2 million tonnes since the beginning of the season due to dry weather conditions in summer and excessive rainfall during September and beginning of October, which is delaying the ongoing harvesting campaign.
The planting of winter cereals (mainly wheat) for harvest in 2018 has started in the southern parts of the country in August. By the beginning of October, plantings were completed on about 74 percent of the intended area. Weather conditions were reported to be generally unfavourable for emergence of winter crops. Due to high temperatures and lack of precipitations, the area intended for winter crops is likely to be less than the last years.
Cereal exports set to reach record high levels in 2017/18
Total cereal exports in the 2017/18 (July/June) marketing year are set at around 43 million tonnes, an absolute record and almost 20 percent above the previous high level achieved in 2016/17. Most of the increase is expected to come from higher wheat exports which are forecast to reach a record of 31.2 million tonnes. This would confirm the country to be the biggest wheat exporter in the world for the second consecutive year.
Limited availability of quality milling wheat in other exporting countries are expected to boost import demand for Russian wheat. Egypt, the largest wheat buyer, imposed new requirements for imported wheat, raising the protein content from 11.5 to 12.5 percent for wheat bought from the Black Sea region. This measure is expected to favour exports from the Russian Federation, where wheat has higher protein content compared to Ukraine.
Amid record supplies of wheat in the country, the Ministry of Agriculture proposed to allocate a rail freight compensation for export grain deliveries from distant areas: Siberia, Ural, Volga and Central regions.
Maize exports are also set to increase to 5.5 million tonnes, 10 percent above the high level of 2016/17.
Export prices of wheat and wheat flour declined since beginning of harvest
Since early August, domestic and export prices of wheat declined pressured by the ample supplies from the record 2017 harvest. Although strong demand for Black Sea wheat provided some support to export prices in the second half of September, prices were 5 percent below their high values of July. Domestic wholesale prices of milling wheat in September reached their lowest level since October 2014.
Prices of potatoes continued to decline sharply in September and were 50 percent below their record highs in June. However, an anticipated 40 percent reduction in the 2017 crop is expected to keep potato prices above their values of a year earlier.
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