Black Sea Region Grain Producers Shifting Exports Eastward

We expect to see increased Asian demand for grains from the Black Sea region (mainly Russia and Ukraine) in the coming years after these markets were largely ignored for at least the last three seasons. More specifically, we see tremendous potential for China to increase its corn imports from Ukraine. As a result of this emerging demand and significant long-term growth potential, we have seen tailored port capacity coming online in the Black Sea region. Only developed markets (and established grain importers) in Asia will resist the renewed attractiveness of Black Sea grains.

The Black Sea countries normally sell to the Middle East, while Asian importers typically buy from the US, Australia and India. However, we expect booming demand in Asian nations to steer them towards the Black Sea’s main exporters, as changes in diets, the expansion of the middle classes, and widening production deficits encourage diversification away from traditional grain sources.

Thailand and the Philippines have recently placed large orders with the Black Sea exporters, and traders expect between 2.0mn and 2.5mn tonnes of wheat from the region to flow into Asia in 2013/14. We see strong potential for China to purchase more corn from Ukraine, and trade agreements under negotiations could lead to 2.0mn-3.0mn tonnes of corn imported from the latter country in 2013/14.

As a result of this emerging demand and significant long-term growth potential, we have seen tailored port capacity coming online in the region:

  • Russia is developing export capacity in the Far East, at its port of Vostochny.
  • Ukraine is pouring investment into its grain port terminal capacity in order to be better prepared for the surge in demand from Asia.
  • Kazakhstan launched its own grain terminal in the Iranian port of Amirabad (which it supplies from its port of Aktau).

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