CEE REPORT FLIPPING PAGES.pdf

Fig 1.1: Major Wheat 3URGXFHUV

0DUNHW YRODWLOLW\ KDV LQFUHDVHG VLJQLÀFDQWO\ LQ WKH ODVW \HDUV DQG WKDW LV RQO\ OLNHO\ WR FRQWLQXH Production risk is being concentrated in fewer geographical areas. Global corn production is becoming more dominant and is anticipated to hit 1 billion tonnes by 2016. However, the four largest producers (US, Argentina, Brazil and Ukraine) now account for c. 80% of global exports. This compares with the top 4 wheat producers accounting for c. 63% of global exports. In other words, supply side risk is increasingly being concentrated in the hands of fewer, larger exporters. This means that when the world does see adverse weather events that hamper or limit production, it now has a multiplier e#ect on the markets. But what does all this mean in terms of pro%tability of farming business’ – speci%cally in the CEE region (using UK as a comparison). Brown & Co are active across the region and have compiled data speci%cally for wheat Costs of Production (COP) in order to compare 2013 harvest COP’s with 2014. The data comprises of actual data and forecast data given sales of 2014 harvest crop are ongoing.

If we look back for amoment to 2013 harvest – wheat prices were riding on the back of supply side shocks and typically themarket ranged from US$175 – 250/t ex farm. Costs of production ranged from$163 – 245/t and yields ranged from 4.15t/ha (Romania) to 8.80t/ha (UK).

Fig 1.2: Per Tonne Costs of Production DQG VDOHV SULFH IRU +DUYHVW 86 W Source: Brown & Co Data

Sales Price Finance* Machinery & Depn. Property Labour Variable Costs

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04 CEE Land Market Brief 2014