June 11, 2007


EU wheat sales seen good on Ukraine's grain export ban


EU wheat sales, especially to the bloc's traditional northern African markets, are expected to be good amid reduced competition, thanks to Ukraine's planned grain export ban.


The Ukrainian government recently drafted regulations that would temporarily ban grain exports due to a severe drought in the country.


However, analysts expect Russia and Kazakhstan, Ukraine's closest competitors, to be the first to fill the supply gap should Ukraine suspend its grain exports.


Additionally, other major grain exporters such as the US, Canada, Australia and Argentina have the potential to pose significant competition to EU wheat in other markets outside northern Africa.


Ukraine's UkrAgroConsult farm consultancy Thursday sharply reduced its 2007 domestic grain crop forecast to 33 million tonnes from the previous May estimate of 37.4 million tonnes. This also marks a fall from 35.1 million tonnes harvested in 2006.


The country's 2007 soft wheat crop output is seen at 15.33 million tonnes, down from 17.7 million tonnes previously forecast.


Meanwhile, Ukraine's planned grain ban has boosted wheat prices amid expectations of tighter global supplies, with European milling and feed wheat futures reaching contract highs recently.

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