August 18, 2008

Ukraine anticipates one of its biggest grain crops in 10 years and domestic prices are decreasing as a result, said the USDA on Friday (August 15).

The Government of Ukraine (GOU) is watching the grains harvest and markets very closely. It has not yet interfered with the market but the Prime Minister's office has started saying that that they are not pleased with the prices, which are going down due to an abundant crop. Today's GOU policy is intended to benefit producers.

The GOU plans to form a State Food Fund and procure up to 14 percent of the annual consumption. More specifically, the Prime Minister announced that the Fund plans to purchase 800,000 tonnes of wheat and 78,000 tonnes of rye in marketing year 2008/2009.

The GOU has also decided on two measures to support grain infrastructure this year. First, the GOU will compensate the interest rates to companies and individuals who build inland silos. The other plan is to sell certain old silos that belong to the state company "Bread of Ukraine" and to build new silos which will be used for storage of purchased grain as a strategic reserve.

Prices for all major grains in Ukraine are decreasing due to high production and supply from farmers. Trading companies are slowing down their purchases due to expectations that the price could continue to go down.

Following the cancellation of grain export quotas, export volumes increased exponentially in June and July 2008. Official Ukrainian statistics show grain exports in June 2008 totaled; wheat at 483,000 tonnes, barley at 413,000 tonnes and corn at 486,000 tonnes.

Total July-June wheat exports totalled 911,000 tonnes; barley exports totalled 1 million tonnes and corn 1.6 million tonnes.