Trade

Ukraine conflict will change trading relationships: Agribusiness Australia

Grain Central, March 15, 2022

AS the Ukraine conflict and prolonged trade sanctions against Russia escalate, so to do the impacts on global trade.

Agribusiness Australia is urging growers to monitor the global market closely and be prepared to respond to the rapidly changing situation.

New Agribusiness Australia analysis shows a rapidly evolving global trading environment, with profound, radical implications for grains production and markets.

Major consumers of grains and oilseeds are in urgent need of supply and are being forced to compromise to maintain food security.

Ukraine and Russia’s importance in the global grain and oilseed trade have grown dramatically during the past two decades. Russia has moved from a net importer to the world’s largest wheat exporter.

The three main crops that Russia and the Ukraine export that compete with Australia on a global basis are barley, wheat and canola.

The conflict has seen the price of wheat surge 52 per cent in the global market. Agribusiness Australia chair Mark Allison said global instability is challenging the world’s trading dynamics.

“Price pressures on crops such as barley may be enough to bring old trade partners to the table.

China in particular has been reliant on imported grains; and with Russia and the Ukraine unable to compete globally, there may be room to lift tariffs on Australian commodities to meet local demand,” Mr Allison said.

“Throughout this crisis, Australian farmers and producers need to pay close attention to the evolving situation, and work with peak bodies to identify opportunities in foreign markets.”

Russian imports into Australia are dominated by wood, chemicals and fuels, comprising of around 71 per cent of total trade.

The most severe impact for Australian grain farmers is rising fertiliser costs, just as seeding begins across southern and western Australia.

Russia’s nitrogenous fertiliser and sulphate exports to Australia are essential for preparing soils for seeding and should supply continue to tighten, more rising costs are expected to continue to flow through agribusiness sector.

“The overall impact for growers will – as always – depend on the balance between input costs and price,” Mr Allison said.

“At this stage, we expect inputs cost to be offset by the rising price of grains and oilseeds, but only if productivity can be maintained.”

Ukraine is a sizeable exporter of key global commodities, and ongoing conflict will likely impact supply of these products.

In recent years Ukrainian exports have been dominated by sunflower seed, safflower oil, corn, wheat, iron ores, iron and non-alloy steel.

“Throughout this crisis, Australian farmers and agribusinesses need to pay close attention to the evolving situation, and work to tap into gaps in supply in foreign markets,” Mr Allison said.

Source: Agribusiness Australia

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