World Grain - July 2015 - 54

FEATURE: CHINA'S AGRICULTURAL MEGATRENDS

Arable land in China

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ciently feed itself."
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ity prices. Trade volumes increased after China's accession to the
World Trade Organization in 2001.

(Million Ha)

132
130
128
126
124
122
2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

1997

1996

120

Source: China MEP, World Bank

Due to environmental constraints, the amount of arable land in China is
shrinking.

GRAIN, OILSEED MARKETS
China continues to be suspicious of markets, Trachtenberg
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in grain.
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modities, but they still don't quite trust us," he said. "That's
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sures and Tariff Rate Quota management."
About 60% TRQ corn goes to state enterprises, but the quota

Black Sea wheat production holding steady
Wheat production in Russia in the 2014-15 season was up
7 million tonnes to 59 million tonnes, said Matt Ammermann,
commodity risk manager, Eastern Europe/Black Sea region, INTL
FCStone during the Global Grains North American conference
this May in Chicago, Illinois, U.S.
Ukraine's production was unchanged at about 21 million
tonnes, and the new crop potential is roughly the same.
Grain exports for both countries are heavily frontloaded, Ammermann said, with famers selling right after harvest in order
to get much needed cash. In addition, the amount of storage
capacity has not increased. The existing infrastructure varies
from modern facilities common in places like the U.S. to former
Soviet-era flat storage with open roofs.
Both nations imposed export restrictions. In Russia, because
the ruble was devalued so much, domestic inflation skyrocketed. The nation reacted immediately and imposed an export tax
to protect the domestic market. Ukraine, which is not as quick to
react, agreed to a certain level of milling wheat exports, he said.
Russian exports for the 2015-16 crop year are forcasted
down a little to 20-21 million tonnes, and Ukraine is expected
to be in the range of 10-12 million tonnes.
"There's still plenty of product to be exported out of the Black
Sea," Ammermann said.
Prior to 2003, the Black Sea region was not a significant
wheat exporter. The region sees large deviations, swinging from
32 million tonnes in 2009-10 to 11 million tonnes in 2010-11.
"It goes back to weather risk, the lack of the correct inputs,"
he said. "Practices are behind the Western World, and they are
not well financed. Farmers cannot use their land as collateral;
it's purely a cash system. Farmers sell crops right off the combine, because they need the cash."
However, over the last two years, the region has been the No.
1 exporter of wheat in the world.
The No. 2 crop in Ukraine is corn, which started as a new
trend in the mid-2000s, Ammermann said. Production was
54

down roughly 3 million tonnes in 2014-15 to 24 million tonnes.
New crop is expected to remain unchanged to a slightly smaller
crop.
"Corn exports continue to move," he said, adding that the
new crop is one the same cycle as North America and is cheaper
than the U.S.
"Quality continues to increase. It used to be almost a whole
grade below the U.S., but that has changed," Ammerman said.
"China is buying Ukraine corn. The quality is the same. They
have Western storage facilities and dryers.
"But it is still labeled with the Ukrainian origin, so price wise
it has to be a little cheaper."
Black Sea region corn yields are low at 86 bushels per acre,
mostly due to the lack of capital. Farmers don't have the money
for corn's high input costs.
"The soil and the weather are like the U.S., so there is potential," Ammermann said. "But it's not going to be quick. It will
take a lot of time."
Ukraine's corn exports are increasing from 5 million tonnes
in 2008-09, to nearly 20 million tonnes in 2013-14. Last year,
exports totaled 18 million tonnes.
Ending stocks are very small because the country is not worried about keeping corn in the domestic market, he said.
"The majority of the corn is exported whereas the majority of
wheat is consumed domestically," he said.
A new trend in the Black Sea market is soybeans. From a
crop rotation standpoint, corn and soybeans work well together. Since 2008, there has been a steady increase, Ammermann
said, with Ukraine expected to produce 4.4 million tonnes in
2015-16 and Russia 2.5 million tonnes.
The region is well positioned logistically to export to major
soybean importers such as Egypt and Turkey.
"A lot of the main importers of soybeans are close to
Ukraine," he said. "Once they start producing more, they will
get more and more of the market share."
July 2015 / World Grain / www.World-Grain.com

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World Grain - July 2015

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