December 13, 2010

Ukraine's grain export quotas extension to cut grain prices up to 20%

Grain export quotas prolongation in Ukraine until March 31, 2011 will cause grain prices to decline by 15-20% by the end of Q1 2011.

According to investment company BG Capital, the first attempt of the Cabinet of Ministers to hold grain prices increase with assistance of imposition of the export quotas until the end of 2010 was not successful.

Ukrainian farmers preferred to hold grain volumes until the end of the year, in order to sell grains at the market prices after the quotas cancellation. Market activity essentially decrease, at the same time, the price conjuncture was not changed, stated the announcement.

Thus, according to experts of BG Capital, Ukrainian agrarians will have to sell grain volumes urgently, due to the fact they are not able to hold grains volumes until the end of the first quarter of 2011 (until quotas cancellation) without grain quality essential decrease and even crops partially losses.

Moreover, before the beginning of the spring crops sowing campaign in the first quarter of 2011, and also taking into account the traditional shortage of bank crediting for the current assets financing, most of farmers will sell grain stocks to all the possible buyers and at any prices, in order to provide the necessary financial resource.

BG Capital stated that certain grain volumes may be exported out of quotas to the Free Trade Zone countries (the CIS countries, Georgia, Macedonia). However, most of all the mechanism will be realized by the government operators and at lower price levels, compared to the market ones.