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How Will Ukraine Unrest Affect Grain Production?

How Will Ukraine Unrest Affect Grain Production?

21 March 2014

ANALYSIS - The political turmoil in Ukraine at the present could lead to a drop in grain production according to the president of the Russian Grain Union Arkardy Zlochevskiy, writes Chris Harris.

Last year Ukraine’s grain harvest reached 63 million tonnes compared to 46.2 million tonnes in the previous year.

However, despite the problems in Ukraine, the Russian Grain Union president said that he expects the unstable financial security of the Ukrainian industry will improve and the events in Ukraine will not have an effect on the global grain market.

Mr Zlochevskiy said that many in the sector are concerned about the possible block on shipments from Ukraine, but he said that shipments are continuing.

“They have not fallen, no contracts are being torn up and none of the niche markets have been lost,” he said.

He added that Russia is also continuing to supply its traditional markets with grain and he foresees no particular problems.

He also did not think there would be any sanctions against Russian grain exports and that countries would refuse Russian exports because Russian grain prices are cheaper compared to US grain prices and more competitive.

According to market analysts FC Stone, the Black Sea region is still set to become a key grains supplier to the Asian market, with corn exports specifically expected to continue rising out of the region.

The Black Sea has increased its export trade to Asia, in particular Japan and Korea, in recent years, following a bumper year for crops.

In the meantime, Ukraine has been strengthening its ties to international organisations.

This week, Ukrainian Ministry of Agriculture officials were in Rome to discuss new financing instruments for agricultural producers in Ukraine.

The talks involved the possibility of a joint project with the UN’s FAO and well as the European Bank for Reconstruction and Development (EBRD).

The scheme would help finance Ukrainian agricultural producers backed by guaranteed harvests in Ukraine.

Chris Harris

Chris Harris

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