How will agricultural prices change after the US withdraws from some markets?

The U.S. withdrawal from some markets will reformat pricing. Maxim Kharchenko, grain market analyst at UkrAgroConsult, wrote about this in his column in The Ukrainian Farmer magazine.

“We can see the difference between the domestic prices in the US and the world prices. The former are likely to fall due to the oversupply, while the world prices for other origins may rise due to the increased demand,” the analyst said.

According to Maksym Kharchenko, Ukrainian exporters will benefit from this gap: they will sell at the benchmark of world prices (supported by demand), without competing with dumped American goods. However, competition from Brazil and Argentina will keep prices from rising too much.

“World corn prices may rise moderately (by 10-15% compared to the baseline scenario), but prices for soybean oil and processed products may even decline due to the redistribution of demand (by $5-10/t for sunflower oil). The global wheat price is more dependent on the harvest in the Black Sea and Australia. Therefore, the ousting of the US (which had only 5-6% of global exports) will not have a dramatic impact on the global wheat market,” the expert said.

Tags: USA, Ukraine, corn, prices