August 16, 2010

Avangardco seeks 600,000 tonnes wheat

Avangardco Investments Public Ltd. is seeking up to 600,000 tonnes of wheat through October 2010 and expects to pay about the same price as last year due to "quite favourable" agreements with local suppliers.

Avangardco is likely to pay US$100-US$105 a tonne on average for the forage wheat due to forward contracts made with suppliers in April, up less than 11% from an average US$95 a tonne last year, Oleg Bakhmatyuk, the Ukrainian company's chairman and controlling shareholder, said. Wheat futures in Chicago are 39% higher than last year's average after Russia announced a grain export ban.

"If it hadn't been for the Russian ban, then our prices would likely be down. It still hasn't been material for the forage market as it has been for the higher quality wheat for export markets," Bakhmatyuk said.

Based in Kiev, the egg producer will use forage wheat as chicken feed to produce an estimated 4.4 billion-4.6 billion eggs this year, up from 3.6 billion eggs last year. Bakhmatyuk said that forage wheat and other feeds make up 75% of the cost of producing eggs.

The company exports dry egg products to 16 countries. Last year, it shipped fresh eggs to Iraq for the first time, increasing exports to 14% of production. According to Bakhmatyuk, that share for exports may grow to 30% by 2011. The company is seeking to expand exports and enter markets, including the EU.