Ukraine's UkrLandFarming signs corn supply agreement with China's COFCO

Paving the way for Ukrainian corn to enter the Chinese market, Ukraine's UkrLandFarming (ULF) Public Ltd has recently signed an agreement on corn supply and transport with China National Cereals, Oils and Foodstuffs Corp (COFCO).

The agreement showed both companies' willingness to deepen cooperation but did not lead to an order from COFCO for Ukrainian corn, ULF Board Chairman Oleg Bakhmatyuk said in an interview on Wednesday (Dec 12).

The Ukrainian company also signed an agreement with Rongsheng Heavy Industry Co, China's largest private shipbuilder, to purchase two grain carriers while retaining the option for more bulk cargo vessels, as it intends to build its own fleet to transport corn to China, the Middle East and North Africa.

Bakhmatyuk said ULF is in talks with five large Chinese companies about possible purchases of Ukrainian corn, with COFCO being one of the largest.

"In principle, Ukrainian corn is allowed to enter China's market, but it remains undecided which Chinese company will have the quota to import Ukrainian corn. Agreement with COFCO will definitely facilitate this process," Bakhmatyuk added.

China and Ukraine signed a protocol last month to allow Ukrainian corn to enter the Chinese market by the end of the year, said Mykola Prysiazhniuk, Ukraine's agricultural policy and food minister.

"The protocol allows us to export corn to China," he said.

The export potential of Ukrainian corn in the 2012-13 marketing year is estimated at 12.5 million tonnes, of which three million tonnes have already been exported, according to Ukrainian government statistics.

Meanwhile, China released a total import tariff quota of six million tonnes of corn for this year. Next year's quota is likely to reach eight million tonnes, according to estimates by industry analysts.

Bakhmatyuk said he hopes the company could send its first shipment of corn to China by the end of this month and estimated that Ukrainian corn exports to China may reach 1-2 million tonnes in 2013.