December 15, 2008

Ukraine's domestic grain prices have dropped this season due to the large crop, said an analyst.

Grain harvest in Ukraine totalled 48.6 million tonnes in clean weight, up two times compared to the previous year, said Anastasia Ivasenko from IA APK-Inform.

Wheat harvest totalled nearly 24.4 million tonnes compared to 14 million tonnes in 2007, while barley reached 12.1 million tonnes.

As a result, third-grade wheat prices in Ukraine fell 40 percent to UAH970 per tonne while feed wheat prices doubled to UAH510 per tonne since the start of the season, said Ivasenko.

Price increases of energy and fertilisers have caused sudden rise of costs for agricultural production, forcing producers to sell their products in losses. 

Ivasenko said the market needs strong exports and growth of domestic consumption in order to handle high grain volumes and price situation.

However, Ukraine's domestic consumption has raised only slightly this season due to continued decrease of flour and cereal demand and the reduction of livestock, said Ivasenko.

However, this season Ukraine showed small rise of the domestic consumption due to continued decrease of flour and cereals consumption on the inner market and the reduction of cattle and pigs livestock, stated A.Ivasenko.