Global Wheat Market Dynamics: What Is the Role of the EU and the Black Sea Wheat Exporters?

Miranda Svanidze,Ivan Đurić

doi:10.3390/agriculture11080799

Miranda Svanidze, Ivan Đurić

Open Access

https://doi.org/10.3390/agriculture11080799

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Abstract

Over the last two decades, three countries in the Black Sea Region—Russia, Ukraine, and Kazakhstan—became global leaders in grain production and trade, and replaced the USA and France as the most previous largest wheat exporting countries. In this study we investigate world wheat price linkages and identify the current “price leaders” of the global wheat market. This empirical analysis is focused on the price relationships between eight of the largest wheat exporting countries and uses a cointegration framework and a vector error-correction model. The results show that, regarding price formation on the world wheat market, the French price is more important for transmitting price signals to other wheat export markets compared to the USA. Furthermore, our results indicate that, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine adjust to price changes in France, the USA, and Canada. Albeit unrealistic in the short run, the creation of the futures market in the Black Sea region might significantly improve the participation of Black Sea markets in price formation of the global wheat market.

Highlights

Over the last two decades, three countries in the Black Sea Region—Russia, Ukraine, and Kazakhstan—became global leaders in grain production and trade, and replaced the USA and France as the most previous largest wheat exporting countries
Wheat is traded on the Chicago Board of Trade (CBOT), the Kansas City Board of Trade (KCBT), and the Minneapolis Grain Exchange (MGEX) in the USA, and on the Euronext in France
In contrast to those studies, we exclusively focus on the price relationships between the exporting countries on the world wheat market

Summary

Introduction

Over the last two decades, three countries in the Black Sea Region—Russia, Ukraine, and Kazakhstan—became global leaders in grain production and trade, and replaced the USA and France as the most previous largest wheat exporting countries. Our results indicate that, despite being leaders in wheat export volumes, the Black Sea wheat prices in Russia and Ukraine adjust to price changes in France, the USA, and Canada. One of the major factors in the recent wheat export growth is the emergence of the Black Sea countries (Russia, Ukraine, and Kazakhstan) as important players in the world wheat market [2]. These countries account for about half of the total increase in wheat exports over the last 20 years. Publisher’s Note: MDPI stays neutral with regard to jurisdictional claims in published maps and institutional affiliations

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