The U.S. Grains Council today addressed the ever-changing political situation in Ukraine, outlining both short- and long-term realities of grain trade in the region.
“Events in Ukraine will have a direct impact on U.S. farmers in the international marketplace,” said Tom Sleight, USGC president and CEO. “The Council is a global organization and has staff and consultants around the world representing the best interest of the U.S. grain trade.”
Ukraine reported a record corn harvest in the 2013/2014 marketing year of more than 30.9 million metric tons (1.2 billion bushels). The USDA projected in February that exports for the year will reach 18.5 million tons (728 million bushels).
Cary Sifferath, USGC regional director for the Middle East and Africa, estimates that approximately 15 million tons (591 million bushels) of this total has already been shipped, leaving approximately 3.5 million tons (138 million bushels) in projected exports between now and June. How this will be affected by the current turmoil is uncertain.
“Ports are open and vessels are loading but shipments are becoming increasingly difficult,” Sifferath said. “We’re seeing farmers holding grain to hedge against a devaluing currency. We hope for a peaceful and speedy resolution of Ukraine’s crisis, but the instability is creating opportunities for additional U.S. exports to North Africa, the Middle East, and China.”
Ukraine’s winter wheat and barley were planted before the onset of the crisis, but corn planting is due to start in the next 30 to 45 days, and credit availability may become an issue.
“The economic instability will affect Ukrainian farmers looking to plant this year’s crop,” Sleight said. “Ukraine is in a tough spot financially, and planting season is just around the corner. The Council will continue to monitor this situation closely.”
The unrest in Ukraine comes on the heels of the Council’s statement last week about the importance of strict adherence to an aggressive stewardship program for biotechnology to minimize the risk of export trade disruption. Ukraine exports corn to the European Union and China, both markets in which biotechnology approval issues currently impede U.S. corn sales. If those buyers turn to the United States, it is important that non-approved events be kept out of export channels.
The statement – from Sleight – read, in part:
“It is important for all sectors of the value chain – individual farmers, technology providers, shippers and exporters alike – to recognize the potentially significant international implications of their actions… The U.S. Grains Council represents a wide variety of members across the value chain committed to maintaining an open and fair grain trading system around the world. We recognize the desire of producers to deploy new technology as soon as it becomes available. We recognize also that continued technology development is essential to achieving global food security and creating new opportunities for producers and agribusinesses...
“There is no easy solution to these conflicting goals. In the short term, we urge all stakeholders to weigh the consequences of their actions, recognize the international implications of planting and marketing decisions, and stringently adhere to their stewardship responsibilities. In the long run, we encourage all parties to join the Council in working for a resolution of the low-level presence and asynchronous approval issues, which is the solution ultimately needed to serve the common interests of producers, agribusinesses, and consumers around the world."