Ukraine to boost grains production with eyes on China

MELBOURNE (Reuters) - Ukraine is aiming to boost grains and oilseed exports to China as rising consumption and trade tensions between Washington and Beijing create new opportunities, a senior industry official said on Wednesday.

The Black Sea region’s top producers, Russia and Ukraine, have been increasing their presence in the global grains and oilseed market, offering stiff competition to exporters in America and Europe.

Russia edged out the United States as the world’s No. 1 wheat exporter in 2017/18, while Ukraine and Kazakhstan have been selling more wheat, corn and sunflower seeds.

“The Chinese market is very important to Ukraine. We see big potential for our grain and oil products in China,” Nikolay Gorbachov, president of the Ukrainian Grain Association told Reuters in an interview.

“The first reason is China’s consumption to rising, and the second is the trade war with the United States.”

Gorbachov, who is due to speak at an industry conference in Melbourne, said he expects Ukraine’s exports of all grains to rise to 55-65 million tonnes in the next three to five years, up from around 45 million tonnes in recent years.

Several grain and oilseed exporting countries including Brazil, Russia and Ukraine are looking at increasing their market share in the world’s biggest soybean consumer China following the trade war.

“China will take more feed grains, barley and sorghum to replace U.S. supplies,” Gorbachov said.

China’s state planner has discussed ways of reducing soymeal levels in animal feed with top feed makers, as Beijing tries to help its farmers cope with a protracted trade war with Washington.

China bought around $12 billion of U.S. soybeans last year, making them a powerful tool in the trade war with Washington.

However, there is growing concern in Beijing that the threat of hefty import tariffs on U.S. soybean supplies will limit availability of an important source of protein in livestock feeds and so drive up meal prices.

Ukraine grows corn on 4.6 million hectares, sunflower on about 6.5 million hectares and soybeans on around 2 million hectares, Gorbachov said.

“All these products are profitable. That is why it is possible to increase planted area under these products. Each of these products can add planting area by 10 percent. I do not think Ukraine will increase land under wheat, which now at 6.5 million hectares,” he said.

Ukraine also had potential to increase yields.

“We grow 4 tonnes of wheat per hectare and Europe produces 8 tonnes. For corn we have 6 million tonnes, whereas in Iowa they have 12 tonnes per hectare, so there is big scope to increase yields,” he said.

Gorbachev said 70 percent of Ukraine’s current wheat crop has been harvested but quality is taking a hit because rains.

“There might be more feed quality wheat. But we have ample supplies for exports.”

Reporting by Naveen Thukral; editing by Richard Pullin