March 23, 2012

A dry northern hemisphere autumn and severe frosts seem to have lessened the wheat crop of Ukraine, one of Australia's major competitors.

Ukraine's farm ministry last week cut its estimate of the Black Sea country's wheat crop by two million tonnes to 14 million tonnes.

The new estimate is in line with that of private agricultural consultancy UkrAgroConsult, which has forecast the Ukrainian wheat crop at 13.8 million tonnes.

Last year's Ukrainian crop was estimated by the USDA at 22 million tonnes, while a 16.8 million tonne crop in 2010-11 prompted the country's government to limit exports.

The curb on exports, coupled with a complete ban on Russian exports by its President Vladimir Putin, prompted world wheat prices to skyrocket.

The Ukrainian Government has indicated grain export quotas were not likely to be reintroduced this year, even though production would only just exceed normal domestic requirements.

Ukraine usually requires about 11.5-12.5 million tonnes of wheat for domestic use, according to the USDA.

If the estimates of the new crop are correct, there was only about 1.5-2.5 million tonnes available for export. The USDA estimates Ukrainian stocks of wheat hanging over from last year's harvest at six million tonnes.

Ukraine was the seventh biggest exporter of wheat in 2010-11, but it ranked sixth the previous season.

With world stocks at record levels, a crop failure in one or more of the major producing countries was the only factor likely to increase prices for Australian farmers.