October 18, 2012
Ukrainian grain traders are speeding up wheat shipments to take advantage of high global prices and because of their fear of the forthcoming export curbs.
Ukraine, whose wheat harvest this year was down by a third because of bad weather, has exported more than three million tonnes of wheat so far this season and traders have collected a further 540,000 tonnes for immediate shipment, ProAgro consultancy said.
"Exporters are trying to accelerate the pace of export shipments of wheat because of the risk of limits on exports in the future, but also because of the increase in prices abroad," the Kiev-based consultancy said in a report.
Foreign markets were paying US$335 per tonne FOB for Ukrainian milling wheat as of mid-October, up from US$305 in September and US$295 in August.
Ukraine exports more than 60% of its grain to the Middle East and North Africa, its biggest clients being Saudi Arabia, Egypt and Israel.
According to the Agriculture Ministry, Ukraine can export no more than five million tonnes of wheat this season, though traders say the overall exportable surplus is higher - possibly as much as 5.5 million-6.0 million tonnes.
Farm minister Mykola Prysyazhnyuk says Ukraine plans no curbs on wheat exports for now, but will consider imposing limits if the high level of exports threatens to push up the price of bread at home.
Ukraine consumes up to six million tonnes of grain per season and keeping the price of bread stable is a key plank of the ruling Party of Regions' campaign for the October 28 parliamentary election.
The former Soviet republic harvested at least 10 million tonnes of food wheat this season, according to the ministry's data. Though he ruled out any limits on barley and corn exports, Prysyazhnyuk said this week that the level of wheat exports would depend on the results of winter grain sowing which is drawing to a close now.
Analysts and traders, however, believe the government is poised to limit wheat exports, whether officially or by raising artificial barriers to achieve the same ends as in 2010, when it virtually halted exports in the first months of the crop season.
"Exports trading can possibly go ahead without restrictions until December but after that we will not have enough volume to maintain such a high pace of exports," one large Ukrainian trader said.
"There will be no miracles and export limits will be imposed," said Rodion Rybchinsky, director of APK-Inform consultancy. "I can imagine even the worst scenario: no restrictions on paper, but restrictions in reality."
APK-Inform forecast exports of 4.8 million tonnes of wheat this season, down by 9% on the 2011-12 season. Analysts and traders said the ministry will have to adopt clear decisions on export limits or return to the "informal" barriers which made exports impossible in the 2010 season.