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IKAR in Mass Media

Ukraine impacts yet to be felt

05 августа 2014 года

WHILE the world is closely monitoring the geopolitical situation in Russia and Ukraine at present, a Macquarie Bank grains analyst does not believe the full impact of the crisis will be felt in the grains sector until next year.

“The major impediment to crop production in the former Soviet Union (FSU) is credit,” said London-based Chris Gadd at this week’s Australian Grains Industry Conference (AGIC).

He said with the current crop planted, it was not likely to impact too much on this year’s production, but that the cost of credit was rising due to the conflict.

“If that cost of credit continues to rise, the majority of farmers in the region are still small scale, with low levels of inputs and that could make it difficult for next year,” Mr Gadd said.

Meanwhile, there are reports Russian traders are considering the possibility of pushing their exports forward to beat any possible sanctions Russia may face as a result of investigations into the crash of Malaysian Airlines flight MH17 in Ukraine earlier this month.

Peter Murphy, Hong Kong-based partner with Holman Fenwick Willan lawyers said the trade had been telling him next year would be the major problem in terms of production.

“Certainly there’s issues there not only in terms of the liquidity for the crop but in terms of the turmoil itself," he said.

“As one trader said to me, if you think there may be tanks rumbling through your fields, you’re less likely to think about planting a crop.”

Mr Murphy’s colleague, Brian Perrott, London partner at HFW, said the market was factoring in the impact of the strife in the region.

“We had some figures for the 2013-14 season forecast that said Russia and Ukraine would account for 70 per cent of global wheat shipments, but now we have seen the same forecasters predict next year’s Ukrainian crop will be down 16pc.”

In the near term, however, the Russian, Ukrainian and Kazakh crops keep rolling off.

Dmitri Rylko, general director at the Institute of Agricultural Market Studies (IKAR) in Russia, said Russia was on track for a 58 million tonne wheat crop, up significantly on US Department of Agriculture projections from earlier in the year.

He said Russia may export over 20 million tonnes of wheat, with the potential to set a record for wheat exports.

Dr Rylko said Russia was making inroads into new markets for its wheat.

“We have just done record tonnages to sub-Saharan Africa, with some important steps in winning market share in Nigeria, along with our traditional markets in North Africa and the Middle East,” he said.

Dr Rylko said a combination of changing weather patterns and improved agronomics meant Russian wheat now had higher protein levels than ever before, which was helping it compete in the human consumption market across the globe.

Source: Theland.com.au  |   |  Comments: 0   Views: 75

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