Miller Magazine Issue: 126 June 2020

60 61 INTERVIEW INTERVIEW MILLER / JUNE 2020 MILLER / JUNE 2020 Sergey Feofilov Founder and Director General UkrAgroConsult “UkrAgroConsult projections look more pessimistic for the Black Sea and the EU. Wheat production and export rise in Russia will not be enough to offset weakness in Ukraine and the EU. Wheat export from these two key exporting regions will decline by 3.5-4 mmt. I am sure that now prices win back the expectations of high supply, but later wheat prices will go up earlier than usual.” ‘We expect price recovery in the wheat market starting from July’ Interview: Namık Kemal Parlak Grain markets have faced many uncertainties posed by the COVID-19 pandemic. The markets are being affected in all countries as a result of measures to contain the pan- demic. Price fluctuations have increased because of the restrictions and deteriorating market expectations. We asked the impacts of the coronavirus and the changing grain market dynamics to Sergey Feofilov, Founder and Director General of UkrAgroConsult, the first Ukrainian consulting agency specializing in agricultural sector of Ukraine and Black Sea region. Mr. Feofilov has more than 20 years of expertise in analysis of agricultural market of Ukraine and the Black Sea countries. He has broad national and international contacts in trading, banking and investment sectors. He is a recognized speaker at the major international agri conferences such as IGC Grains Conferences and Black Sea Grain (Ukraine). Here is UkrAgroConsult Director General Sergey Feo- filov’s answers to Miller Magazine’s questions regarding the impacts of the coronavirus outbreak on the grain markets: What are the initial effects of the coronavirus out- break on the grain markets? Can you provide some insight into the current state of the market briefly? What are the main differences between the 2007-09 food crisis and the COVID-19 crisis? Similarly to the 2008-2009 crisis aftereffects, we are much more concerned about prospects of the next 2021 grain production in the Black Sea region than that for the current 2020. Our outlook for corporate earnings and profits for 2020 is very modest. Farmers’ losses may climb to new highs due to national currency devaluation and peaking competition. Profits recession is likely to be accompanied by impressive easing in external solvent demand for key grains for Ukrainian farmers. The Covid-19 pandemic is causing breaks in the global food chain, resulting in shortages of some products. Should we worry about grains? Can you share UkrAgroConsult’s projections for wheat and corn supply and demand for the 2020/21 season? Anyway, the supply/production side of the grain mar- ket was not greatly affected in 2020 by the Сovid-19 as farmers made all decisions regarding the winter crops (incl. wheat) yet last autumn. Spring crops were planted also in line with the previous intentions as inputs need- ed (seeds, fuel, crop protection, fertilizers, etc.) were bought by farmers until national currencies devaluation and lockdowns imposing. Another side of the grain market – the demand side – was affected much more seriously. The unemployment rate jumped all across the world, most governments have enforced widespread shutdowns, limiting social contacts, closing industries, shops and restaurants. Household spending drop was accompanied by disruptions in the logistics and transport chains. ‘WHEAT MARKET IS NOW THE WEATHER MARKET’ What will be the key factors affecting the wheat prices in the coming months? Though it looks like it’s going to be another bumper season for wheat supply, the May USDA release still is in the spotlight and under thorough consideration. The release includes quite a bright wheat production forecast and growing wheat stocks. Nevertheless, the market reply to the USDA report was