October 25, 2012


Ukraine's grain export ban boosts wheat in Chicago report



Following Ukraine's confirmation on its grain export ban due to dry weather and accelerating demand cut supplies, wheat rose in Chicago on a report.


Shipments will be barred as of November 15, Reuters reported citing Agriculture Minister Mykola Prysyazhnyuk. Exports may reach 5.3 million tonnes next month, a point that threatens to exhaust Ukraine's exportable surplus, the government said October 19.


Drought may cut combined wheat harvests in Ukraine, Russia and Kazakhstan by 37% this year, helping send global stockpiles to a four-year low, the USDA estimates.


"The supply-and-demand balance is very tight," Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland, said by telephone. "Long term, we are still in a situation that should keep prices high."


Wheat for December delivery added 0.5% to US$8.735 a bushel at 7:10 a.m. on the Chicago Board of Trade. Prices are up 34% this year. In Paris, January-delivery milling wheat rose 0.6% to EUR264 (us$341) a tonne on NYSE Liffe after reaching EUR264.25 (US$344), the highest price since October 11.


The USDA estimated October 11 Ukraine's wheat exports in the 2012-13 season would be the lowest in five years at four million tonnes. Global inventories before next year's Northern Hemisphere harvest may drop to 173 million tonnes, 13% lower than the previous season, according to the USDA.


Wheat almost doubled in 2010 in Paris trading and climbed 47% in Chicago after a drought spurred Russia to halt exports for 10 months and Ukraine to restrict shipments. Russia, whose government has said production this year may be lower than in 2010, may have no need to limit exports in the current season, President Vladimir Putin said October 10.


Ukraine exported 3.8 million tonnes of wheat since the current season started July 1 and outstanding contracts total 5.4 million tonnes, the Agriculture Ministry said. Ukraine has enough milling wheat to meet domestic needs in the season and for reserves, it said. 
Soy for January delivery gained 0.6% to US$15.6475 a bushel in Chicago. Corn for December delivery added 0.2% to US$7.5725 a bushel.