December 2, 2011

Fears of low stocks trigger Saudi-Ukraine grains deal

The new grain import agreement of Saudi Arabia with Ukraine has started as its 2011 barley imports from the European country are expected to halve, according to an analysis body APK-Inform on Thursday (Dec 1).

"Saudi Arabia is definitely worried about barley supplies for the current year and even further out, after the Ukrainian government imposed export duties earlier this year," said Svetlana Synkovska, marketing manager at APK.

Saudi Arabia, the Arab world's largest economy, is likely to import two million tonnes of Ukrainian barley in the 2011-12 crop year, compared with 3.9 million tonnes a year earlier. Synkovsa said that Ukraine would export a total of 2.7 million tonnes of barley this crop year, making Saudi Arabia as its major customer.

The Ukrainian government imposed export duties on grain July 1 as a result of last year's drought. In October, Ukraine's President Viktor Yanukovich abolished the export tax for wheat and corn but the barley export duty of 14% still remains intact. The duty is paid by Saudi Arabia, making its grain purchases more expensive.

A few days ago, Saudi Arabia reached an agreement with Ukraine to import grains, mainly barley, the kingdom's Finance Ministry said, giving few details.

"The agreement highlights that Saudi Arabia is worried the country will have a shortfall in barley supplies, especially if the export duties aren't lifted for the next season," APK's Synkovska said.

Ukraine exported 6.808 million tonnes of grain between July 1, the beginning of the current marketing year, and Nov. 28, which is 1.68 million tonnes more than in the corresponding period last year, its Agriculture Ministry said. The total included 2.14 million tonnes of wheat, including 1.155 million tonnes of milling wheat and 0.985 million tonnes feed wheat, 1.836 million tonnes of barley and 2.756 million tonnes of corn.

Ukraine is likely to export 27 million tonnes of grain in the 2011-2012 marketing year, compared with 12.1 million tonnes a year earlier.