Russia and the Ukraine will most likely massively expand their corn production – this was the take-home message of Dr. Yelto Zimmer, coordinator of the agri benchmark Cash Crop network and economist at the German Thünen Institute. Yelto Zimmer has been invited to talk at a conference jointly organized by the Russian Ministry for agriculture and the Russian Grain Union called “Black Sea Grain and Oilseeds 2012/13”.
According to Yelto Zimmer’s analysis, key drivers for the expected growth in corn are: (1) In the Russian central black soil region, corn yields are already today 1 to 1.5 t/ha higher than wheat yields. (2) Corn yield grew in this region by roughly 6 per cent per year – this growth is almost twice as fast as in wheat. (3) Corn prices – contrary to world markets – have been at least as high as wheat. These figures are also reflected in farm economics as displayed by agri benchmark and its typical farms. From 2008 to 2011, gross margins per hectare in corn have been from 70 up to 500 USD higher than in wheat.
Assuming wheat and corn prices at 200 USD/t and that previous trends in yields continue for the two crops, an advantage in corn revenue vs. wheat of about 450 USD/ha can be expected by 2020. Thereby a strong incentive to boost corn production will be created.
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