October 10, 2011
Ukraine abolishes export duties for wheat, corn
Ukraine cancelled its wheat and corn export duties but retained the levy on barley exports Friday (Oct 7).
The law needs to be signed by President Victor Yanukovich and published to come into force.
The former Soviet republic imposed the duties in July and traders have said the measure slashed Ukrainian exports as Ukrainian-origin grain could not compete with cheaper Russian grains.
Ukraine plans to boost its grain harvest to 50-53 million tonnes of grain in 2011 after drought restricted the harvest to 39.2 million tonnes in 2010.
Farm Minister Mykola Prysyazhnyuk has said the country could export 24-25 million tonnes of grain in the 2011/12 season, but the existing export duties have raised doubts shipments could reach those levels.
He said exports could reach just half the previously expected record volume if export duties on grains remained in place.
Ukrainian traders said this week that grain exports rose to about 1.48 million tonnes in September from 1.4 million in August.
The director of Ukrainian Agrarian Confederation (UAC), Serhiy Stoyanov, said Ukraine had exported about 3.3 million tonnes of grain in the first three months of the current 2011/12 season against 3.5 million in the same period in 2010/11.
The former Soviet republic last year limited grain exports by quotas and sold abroad 12.7 million tonnes of grain in the 2010/2011 season. Grain export duties replaced quotas.
Export duty on wheat is 9% but no less than EUR17 (US$24.30) per tonne. Export duty on barley is 14% and no less than EUR23 (US$31) per tonne. Export duty on corn is 12% and no less than EUR20 (US$27).
Stoyanov, said however there was no reason to expect sharp changes on Ukrainian domestic and export markets in the face of vigorous competition from Black Sea neighbours.
He added that he sees no sharp movements on the markets in the nearest future. The key niches are already occupied by Russian, Romanian, Kazakh grains. Their return to the markets will be step-by-step and difficult.
Russian Prime Minister Vladimir Putin said this week his country would harvest 95 million tonnes of grain this year against 61 million in 2010 and 97 million in 2009.
Russia's powerful grain lobby, the Russian Grain Union, also said the grain export could reach a record 25 million tonnes in 2011/12.
Another competitor for Ukrainian grain, Kazakhstan, plans to export one million tonnes of grain a month from November.
Ukraine harvested 22.2 million tonnes of wheat in 2011 and exportable surplus could total 10 million tonnes this season. It also plans to export 10-12 million tonnes of corn and about three million tonnes of barley this season.
A foreign trader said they had expected the decision on duties and think that the recent actions of protest of Ukrainian farmers have forced the government and the parliament to accelerate the process.
Ukraine exported 1.5 million tonnes of wheat in the first three months of this season.
"The market needs time to understand the changes and I do not think that Ukraine will boost its exports in the near future," a trader from large foreign grain house told Reuters.
He said the law could increase offers on the local market.
The parliament rejected a proposal to impose low-level duties on exports of Ukrainian sun oil, soy and rapeseed.
The draft law had included an article setting export duty for sun oil at 3% of custom value but no more than EUR5 (US$6.7) per tonne. The duty for rapeseed was proposed at 3% but no more than EUR2 (US$2.7) per tonne, while the duty for soy was proposed at 3% but no more than EUR2 (US$2.7) per tonne.
Ukraine's Economic Development and Trade Ministry last week said it had drafted its own bill that would slap duties on exports of sun oil, rapeseed and soy.
The ministry has proposed the following new export duties: 10% but no less than EUR84 (US$113) per tonne for sun oil, 9% but no less than EUR15 (US$20.2) per tonne for rapeseed and 12% but no less than EUE33 (US$44.42) per tonne for soy.