• Lynda Kiernan

Black Sea Region Ideally Situated to Meet Rising Global Grain Demand – Macquarie

If the Black Sea region can restore socio-political peace, it will likely find itself to be ideally situated to profit from meeting the rising global demand for grain, according to Macquarie.

Macquarie forecasts that the region has the potential to grow its wheat production by more than 50% from 92 million tons to 137 million tons between 2015 and 2030, noting that the region has greater potential to increase arable land under production than the EU, North America, or Australia, and has a lower cost of production than South America. In addition, an increase in grain production will happen simultaneously with declining domestic consumption, providing more grain for global markets.

The bank estimates that Russia may be able to produce an additional 8.3 million hectares of wheat with the potential to increase yields by 16% by 2030, while Kazakhstan’s wheat acreage may reach 15 million hectares with the potential to increase yields by 20% within the same time period. Meanwhile, Ukraine is viewed as able to increase its corn acreage by 50% to 11 million tons in the next 15 years driven as a result of more available land as pasture usage declines.

Within this same time period, Macquarie forecasts that the world’s demand for wheat and corn will increase by an additional 300 million tons, and the Black Sea’s extensive land banks and lack of modern production technologies create a great potential for yield improvement, while its low cost of production leaves the region better positioned than South America to meet this need.

"Historically, the traditional suppliers of grains to the global market have been North America, Europe, and Australia. But going forward, with limited new land available in these regions, it is unlikely that they will be capable of responding to all of the increased demand," said Macquarie.

The bank warns however, that the current political unrest in the region has the potential to disrupt this development, and that for the region to seize this potential, it will require investments into the region’s infrastructure and more modern agricultural production technologies.

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Lynda Kiernan is Editor with HighQuest Group Media and of the Oilseed & Grain News. If you would like to submit a contribution for consideration, please contact Ms. Kiernan at lkiernan@highquestgroup.com.

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