Recent activity in Ukraine’s national grain production has attracted attention and potential concern over global market impact.
To offset a record bumper crop, Ukraine removed its export duties on wheat and corn last year. As the chart below illustrates, coarse grain production in 2010/2011 exceeded 20 million metric tons. While domestic demand only currently accounts for half of production, if Ukraine’s government continues to remove trade restrictions and open its markets, the surplus in grain exports could potentially flood neighboring markets and undercut suppliers.
Despite Ukraine’s actions to move these cash crops, an export quota system will remain in place until the end of June. Thus, market uncertainty will continue as we wait for Ukraine’s 2nd quarter numbers to be reported.