Global Grain blog


Published January 2018 by Svetlana Malysh, Black Sea Agriculture Markets Analyst, Thomson Reuters


Svetlana Malysh, Black Sea Agriculture Markets Analyst, Thomson Reuters

In 2017 Black Sea countries kept increasing their grain crops and exports, mainly due to the record crop and stocks in Russia. According to the results of 2017/18 season Black Sea may became the world leading grain exporter. According to Thomson Reuters’ specialists, next season Black Sea region may retain its high grain export potential.

Record crop

In 2017 total grain crop in Russia and Ukraine became record and reached 189.7 MMT, according to the official data. Such high grain production numbers were reached as a result of a record high wheat crop in Russia at 88 MMT.


In contrast, due to unfavorable weather conditions grain crop in Ukraine felt by nearly 5.5% on year and totaled 62.3 MMT.


Record exports

Record production in the Black Sea countries ensured high export potential. According to the official estimates, 2017/18 season grain exports from Russia may reach 45 MMT, including 35-40 MMT of wheat, from Ukraine – 44-45 MMT.


Latest export shipments data has proven the official forecasts so far.


Latest data shows that during July-November Russia shipped over 22.7 MMT grains abroad, exceeding the export pace during the same period last year by third.


It should be noted that this season Russia has exported grains at an impressive pace, despite having infrastructure constrains and changes in VAT administration system for grain market participants.


Record high export shipments from Russia are also ensured with record ending stocks. Beginning grain stocks in Russia for the current season are estimated at 14.5-14.8 MMT, which with the record crop allows to ship grain abroad actively.


Mild weather conditions favor active grain shipments from the ports as well. This season monthly grain export shipment volumes have exceeded the figures of the last year by 30-40% on average. In November this year the historical record in monthly exports was set at 5.53 MMT.


Grain exports from Ukraine lags slightly the last year’s pace – from the beginning of 2017/18 season 17.2 MMT of grain were exported against 17.8 MMT during the same period last year. At the same time, wheat shipments are nearly the last year’s pace, the biggest lag observed for corn shipments – 22% y-o-y.


Comparing the prospects of export shipment from the global market participants, it should be noted that in the current season Black Sea countries may become the leading grain exporters. According to official estimates, grain exports from both Russia and Ukraine may total nearly 90 MMT, outperforming the USA with projected by USDA exports at 80.5 MMT.


Price movements

During the last calendar year grain prices in the world remained low. According to Thomson Reuters monitoring, prices for Russian 12.5 protein wheat were ranged as $180-195 per ton, for Ukrainian feed corn – $160-175 per ton on Black Sea deep-water ports’ basis. 


Forward prices for 2018 year crop don’t differ from these levels and total $185-190 per ton for Russian 12.5% protein wheat with shipment in August and 170-175 per ton for Ukrainian feed corn with shipment in November on Black Sea deep-water ports’ basis. 


Low prices are not the consequence of the huge grain supply from the Black Sea region, but to the global supply and demand balance with its abundant supply and sufficient stocks. 



What is next? Prospects for the new season

Black Sea countries had already sown the winter crops. The winter crop areas may give us the opportunity to estimate the prospects of the new year crop and trends in prices partially.


It should be noted that Black Sea countries reduced areas under winter crops, including winter wheat and barley, for 2018. In Russia winter areas were cut by 1% on year – to 17.1 mln ha against 17.3 mln ha last year; in Ukraine – by nearly 3% to 6.9 mln ha against 7.1 mln ha.


Nevertheless, the cut in sown areas in the modern world won’t necessary mean lower grain production considering that today applied technologies in the agricultural sector and weather conditions during critical periods of plant development are becoming more important factors. 


Middle-term weather forecast prepared by Thomson Reuters specialists  calls for mild weather conditions up until February 2018 in Russia and Ukraine with above normal temperatures, but below normal precipitations. All together these factors mean rather favorable conditions for winter crops and minor winterkill risks.


Taking into account long-term trends in grain production and whether forecasts, Thomson Reuters Agriculture Research specialists estimate 2018 wheat production in Ukraine at 26.4 (22.5-27.8) MMT, 1% below the current year production. 


In Russia grain production forecasts are also slightly below the current record year. Analytical Centre SovEcon expects 2018 grain production in Russia at 134.3 MMT. Ministry of Agriculture in Russia is more conservative in their forecasts and says that “new crop is unlikely to repeat current year record”, first of all due to high stocks.  


In general, new crop will also depend on weather conditions in spring, especially in the period of heading. 


Nevertheless, based on the available data there are reasons to suppose that the new year grain crop in the Black Sea region might be rather sufficient to maintain the grain export potential at significant level.




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