February 10, 2011

 

Ukraine to review grain stocks to settle on quotas

 

 

Ukraine's Farm Ministry would review the country's grain stocks to decide whether the country needs to limit grain exports for the remainder of the current season, it said Wednesday (Feb 9).

 

"We will re-examine grain stocks of our producers and will make a decision," Farm Minister Mykola Prysyazhnyuk said.

 

Ukraine, the world's top barley exporter and a major wheat supplier, introduced export quotas after a drought last summer to prevent a rise in domestic bread prices after neighbouring Russia banned grain exports for the whole 2010/11 season.

 

In October, the government introduced a 2.7 million tonne grain export quota, and in December it extended the quotas until March 31 and increased the total volume to 4.2 million tonnes.

 

Last month Prysyazhnyuk said that the ministry would urge the government to allow unlimited exports of grain in the forthcoming 2011-2012 marketing season and in the last three months of the current season.

 

Last week Ukraine's Economy Ministry said it had proposed that the government should cancel restrictions on corn exports in the 2010/11 season.

 

But Prysyazhnyuk said the government had taken into account negative harvest news from abroad. "We had expected good harvests in Brazil and Argentina. But now we see that the forecasts of their grain yields are reduced. We see a serious shortage of grain," Prysyazhnyuk said.

 

Drought in Russia, which banned grain exports in the 2010/11 season, pushed global grain prices to record high levels, and the recent news of a possible fall in the grain harvest in China became an additional factor for the jump in prices.

 

US wheat futures rose half a percent on Wednesday (Feb 9), building on the previous session's 2% rally to reach near a 30-month high on growing concern over production in China and the US and strong demand.

 

Wheat output in China, the world's largest producer and consumer of the grain, may be at risk after severe winter drought in its main northern producing regions, the UN's Food and Agriculture Organisation said.

 

Ukraine, which harvested 16.8 million tonnes of wheat in 2010, has exported about 2.7 million tonnes so far this season, down from 6.9 million tonnes in the same period in 2009/10 due to quotas.

 

Ukraine's grain exports fell to 7.3 million tonnes in the first seven months of the 2010/11 season from 15.8 million in the same period a season earlier, according to data provided by UkrAgroConsult agriculture consultancy.

 

The consultancy said Ukraine had reduced exports of barley to 2.38 million tonnes from 4.18 million. Exports of corn fell to 1.92 million tonnes from 3.59 million.

 

Ukrainian wheat is traditionally cheaper that the grain harvested in the European Union and could compete on the key markets in the Middle East or North Africa. Traders said on Wednesday (Feb 9) that the lowest offer in a Lebanese government tender to buy 22,500 tonnes of milling wheat, which closed on Tuesday (Feb 8), was US$414.67 a tonne C&F and the offer was for Ukrainian origin.

 

Ukrainian soft milling wheat is traded at about US$340 FOB Black Sea.