Together with Brazil, Ukraine displays the most favourable climatic conditions for the production of grain crops, offering fertile soils and a relatively low cost of production. The two countries however, have faced financial and logistical problems, which have impacted the "economic climate" at current price levels, such that producers are being discouraged from increasing production volumes of grains and oilseeds.
Speaking at the second round of the V Ukrainian Grain Congress in Kiev on November 26, Macquarie Bank agricultural research analyst, Daryna Kovalska, noted that reduced access to financing for agrarians will likely have the most negative effect on the agricultural sector in Ukraine.
She concluded that as prices have already fallen below the marginal cost, and are now cutting into the US cost of production, the onus is shifting to the world’s largest farmer to respond to this negative margin environment appropriately and reduce supplies for the 2015 harvest. Ms.Kovalska added that such actions will likely shift production towards the cultivation of more cost-effective crops, such as soybeans and cut spend on inputs.
