October 20, 2011


Ukraine cancels wheat, corn export duties


A law cancelling wheat and corn export duties has been signed by Ukraine's President Viktor Yanukovich on Wednesday (Oct 19).


This opens the way for the former Soviet republic to pursue ambitious plan to export a record 27 million tonnes this season.


Ukraine imposed the duties in July and traders have said the measure slashed Ukrainian exports as Ukrainian-origin grain proved unable to compete with cheaper Russian exports.


Earlier this month, the parliament cancelled export duties for wheat and corn, contingent on Yanukovich signing the move into law, but kept in place the levy on exports of barley.


The restrictions had already clipped Ukrainian exports to 3.8 million tonnes so far this season against 4.8 million in the same period in 2010/11, when the country was hit by drought, and compared to about seven million tonnes in 2009/10.


Analysts say the lifting of export duties will accelerate grain shipments from Ukraine but they say the increase would prove to be more telling in November.


Mykola Vernytsky, ProAgro consultancy analyst said the export could show a real rise in November. Ukraine could export no less than two million tonnes but do not expect that the volume will be much higher.


Serhi Stoyanov, director of the Ukrainian Agrarian Confederation grain lobby said market players were now waiting for the presidential decision to be officially published.


He said they expect a rise in shipments after the publication but it will be mostly a jump in corn exports.


Ukraine plans to harvest a record 19-20 million tonnes of corn this year and 10-12 million tonnes of the commodity will be exported according to a farm Ministry forecast.


Ukraine's Farm Minister Mykola Prysyazhnyuk earlier on Wednesday said the ministry raised its forecast of the 2011 grain harvest to 53 million tonnes from the previous 51-52 million.


Prysyazhnyuk said that this year they plan to harvest about 53 million tonnes of grain. It will be one of the highest harvests in Ukrainian history. This volume allows them to export about 27 million tonnes.


Ukraine exported 24.7 million tonnes in the 2008/09 season, the record volume for Ukraine.


Traders said the new trade regime would allow the market to revive and Ukraine should increase October exports over September's, although they do not expect a sudden spike because of competition from plentiful Russian and Kazakh grain.


Ukraine exported 1.48 million tonnes of grain in September.


"We are loading some ships and we are waiting for the cancelling of the duty to send ships to clients," a trader said on Wednesday morning before the news Yanukovich had signed the law ending export duties on wheat and corn.


But analysts also said the latest official forecasts for the 2011 grain harvest and exports were too high and noted that Ukrainian transport infrastructure could not ship abroad 24 million tonnes of grain during the next eight months.


"I do not believe in such high figures. The maximum level of the harvest is 50 million tonnes, maximum level of exports (for the whole season) - 24 million," Vernytsky said.


"We have already missed four months of this season and I do not understand how we can export an additional 23-24 million tonnes by the end of this season".


UkrAgroConsult agriculture consultancy forecast the harvest at 46.8 million tonnes and the exports at about 22 million tonnes.


APK-Inform agriculture consultancy said Ukraine was likely to harvest 46 million tonnes of grain and would export about 21 million tonnes in 2011/12.


Ukraine, which limited exports last season after a severe drought, exported 12.7 million tonnes of grain in 2010/11.

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