May 31, 2007

Ukraine likely to ban grain exports in July

Ukraine will allow wheat exports from June but severe drought is likely to prompt the government to ban all grain exports from July, the deputy prime minister said on Wednesday, boosting European wheat futures.

According to Ukraine's agrarian policies minister Viktor Slauta, a government resolution would allow between 800,000 and 900,000 tonnes of wheat to be exported next month but would probably ban exports starting July 1 if there is no rainfall by mid-June.

Export restrictions introduced by Ukraine last year after a lower-than-expected grain crop disrupted shipments and inflicted millions of dollars of losses on some trading firms.

A top weather forecaster said on Tuesday severe drought had so far affected 60 percent of the grain crop and analysts have reduced earlier forecasts for the 2007 harvest.

Slauta said the country currently held between 3 million and 4 million tonnes of wheat.

Traders and millers said grain prices would rise sharply as a result of any export limitations. Russian exports in the coming 2007/08 season are also expected to decline year on year. Feed grain exports will also be affected, the traders said.

APK-Inform agricultural consultancy revised down its 2007 grain crop forecast to 33.3 million tonnes from 34.3 million last year.