August 11, 2010

Grain traders stop buying wheat on domestic market in Ukraine

Grain traders have generally stopped buying wheat on the domestic market because of the Ukraine government's uncertainty about grain export, according to Volodymyr Klymenko, president of the Ukrainian Grain Association.

"All traders, with some minor exceptions, have stopped buying wheat off farmers until the situation is clarified," Klymenko said.

Currently, the companies are not making contracts on wheat export now, he added.

Ships loaded with wheat and barley are in the port awaiting a permission of the State Customs Service to export.

Klymenko asked Vice Prime Minister Viktor Slauta to verify the Customs' actions.

"I declare we are facing the situation when it is necessary to make a decision. If Ukraine does no limit export, we have to remove artificial barriers hindering execution of the contracts made," Klymenko said.

He reminded that the scheme of cargo custom clearance has changed and become more complicated. In particular, besides all standard procedures, the customs office tests quality of product samples in laboratory.

A ship with 5,000 tonnes of wheat on board belonging to the Topfer company, a large grain trader, is currently under arrest since wheat samples selected for laboratory tests do correspond to that mentioned in the documents, the president of the Ukrainian Grain Association said.

A dozen of ships are lying in the Ukrainian ports and they may befall the same fate, Klymenko emphasised.

The Ukrainian Grain Association predicts that the Cabinet of Ministers will impose a temporary ban on wheat export. If imposed, the contracts grain exporters made at lower price earlier are expected to be automatically cancelled due to force majeure, and then they will be rearranged at a new higher price taking into account the current situation on the world grain market.