Ruslan Sokol has no idea why prices for wheat he grows on the vast flatlands of central Ukraine have started to recover from five-year lows. More than 1,600km to the west, French farmer Stephane Jean knows all too well.
While both countries have suffered from a world grain surplus, their fortunes are now diverging. Floods have cut crop yields to a 30-year low in France, the EU’s top producer. That has opened the door for exporters in the Black Sea, where Russia is reaping a record harvest, bins are overflowing in Romania and Bulgaria, and Ukrainian farmers are collecting more than expected.
“I know nothing about the harvest in France, just what I’ve heard from you,” Sokol, 36, said by phone from the Kiev region where he farms wheat, barley, soybeans, corn and sunflowers on 1,000 hectares. “Prices are low, but there was an increase about a week ago.”
Photo: Reuters
After three long years in a bear market, Ukrainian and Russian milling wheat prices are up more than 6 percent since the middle of last month, data from researcher UkrAgroConsult show. That follows the deluge in France, where crop damage are forecast to send exports plunging to a 15-year low this season, according to InVivo, the nation’s largest wheat shipper.
France’s share of the world market is expected to fall to 7 percent from 12 percent, and InVivo, a union of more than 200 cooperatives, will need to tap supplies from elsewhere, including Black Sea nations ,to meet demand from customers.
For French farmers, earnings could drop by half to 740 euros (US$838) a hectare, Paris-based agricultural adviser Agritel said.
Photo: Bloomberg
The average 120-hectare harvest would rack up losses of almost 60,000 euros and the proportion of those ending up in the red would increase from 51 percent last year, already the highest since 2009, according to Agritel and Orama, a union of growers’ associations.
“I’ve had bad harvests and I’ve had bad prices, but I have never had both” together, said Jean, 53, a third-generation farmer who grows wheat and rapeseed in Thoiry, about a half-hour drive from the Palace of Versailles. “We were able to make a living. This year we won’t. We will have to go into savings.”
The downpours, which also threaten wheat in neighboring Germany, the second-biggest EU producer, and the Baltic states, will force importers to turn to growers in the Black Sea region to meet their needs. That clears the way for nations such as Russia and Ukraine to sell to markets from Morocco to Algeria.
Romania and Bulgaria also have the chance to ship to France.
Bulgaria’s Vitagrain BG had “very preliminary” talks to sell wheat to France, chief executive Martin Roussev said.
It is possible “to see some shipments from Bulgaria to France if the price justifies,” he said, adding that many French traders were awaiting final harvest estimates to decide imports.
At least one French trader is also looking to bring grain from Romania, said a person familiar with the deal who declined be identified. Wheat from Bulgaria and Romania does not incur import duties in France as they are part of the EU.
A shift to supplies from the Black Sea brings longer-term risks for French growers as their customers find new providers.
“It worries me a bit for the future,” Agritel head Michel Portier said. “When you are used to buying fruit at a store and the store is closed for construction, you go to another store and you realize that the fruit is just as good.”
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