With a growing share of global wheat trade, Russia, Ukraine and Kazakhstan — former Soviet Union countries — have become price setters in the world wheat market over the last few years.
As Bill Tierney, chief economist with AgResource Company, points out in this Wheat School episode filmed at Cereals North America ’15, much of the volatility in the wheat market in recent history traces back to the Black Sea region.
“It is a zone of high-risk agriculture,” he says, noting the three countries listed above, as a regional unit, are now the world’s largest exporter of wheat. 25 years ago, they were the world’s largest importer of wheat.
Barring what happens in this region, he says the global wheat surplus will likely continue to trend higher over the next three to five years. As global stocks build, prices will be depressed.
“You will have periods of intense volatility, and I think much of that volatility will come from events in the Black Sea region, whether they’re political events, meteorological events or a combination of both,” says Tierney.