November 1, 2011

Ukrainian wheat price lower than Russia's

Ukraine is expected to offer a lower price for milling wheat than Russia in North African and Middle Eastern markets as it has won a tender in Egypt on October 29 (Sat), according to UkrAgroConsult in a Bloomberg report.

Egypt, the world's biggest wheat importer, bought 120,000 tonnes of Ukrainian wheat, half from Toepfer International at US$247.92 a tonne and half from Venus International at US$249.30 a tonne. Ukrainian wheat was US$8 a tonne less than the lowest Russian offer, the Kiev based researcher said.

"We will be competing with Russia all the time on the Egypt market now," Liza Malyshko, an analyst at UkrAgroConsult, said. "I think Ukraine will be able to sustain a lower price in this market. A lot will depend on the domestic price. Internal prices in Russia have started to increase and we see that this trend is starting here."

Ukrainian authorities scrapped a 9% export tax for wheat, which came into force on July 1, from October 22. The government expects Ukraine's grain harvest to increase by 35% to 53 million tonnes this year, helped by favourable weather. The Agriculture Ministry expects 27 million tonnes of grain to be shipped this year, Mykola Prysyazhnyuk, the minister, said.

Buyers' interest in Ukrainian wheat and the number of traders at tenders suggest that exporters will buy in the domestic market and that the price for milling wheat will gradually increase, according to the researcher.

Wheat prices are not seen declining in Russia nor in Ukraine until the status of the 2012 harvest is known, according to Malyshko.