Forecasts on Ukraine grain exports 'too low'

by Agrimoney.com

Official forecasters are too downbeat about prospects for Ukraine's rebound in grain exports next season, despite the prospect of duties on shipments, one of the most powerful men in the country's farm sector said.

Andrey Verevskyy, chairman of sunflowers-to-silos giant Kernel, said that the Black Sea agricultural powerhouse would "have the potential to export above 20m tonnes" of grain in 2011-12, representing a rise of at least 50%, provided the country does not suffer a return of the weather extremes which marred last year's harvests.

The forecast is above the 19m-20m tonnes forecast by Ukraine and an 18.5m-tonne estimate last week from the US Department of Agriculture.

Although Mr Verevskyy failed to expand on his thinking, and was in line with both Kiev and Washington forecasts on grain production, he was sanguine over the prospect of Ukraine relaxing export curbs only to introduce duties on shipments in their place.

"While we clearly view the free export of grain as the best option available to both farmers and market operators, we nevertheless understand the government's concern and interest in keeping inflation under control," Mr Verevskyy said.

"To achieve this goal, we consider the introduction of reasonable grain export duties as an acceptable mechanism to counter the increase in food prices in the country."

Ukraine is the top-ranked corn exporter outside the Americas, and was the world's sixth-ranked wheat shipper before last year's devastated harvest.

Trader hoarding?

The comments come amid heightened speculation about the return of the region, renowned for its price competitiveness, to large-scale shipments, with some traders also forecasting a limited return to trade from Russia, which barred grain exports completely from August.

"Grain traders in Russia still believe that some exports will have to be allowed at or ahead of harvest to relieve the storage situation in the south," the UK arm of major European commodities house, with operations in the region, said in a market report late on Friday.

"The thinking now is that a quota of about 3m tonnes will be exported, quite possibly with an export tax imposed."

SovEcon, the Moscow-based analysis group, on Monday reported prices of fourth-grade wheat, the main type used for exports, rose 25 roubles last week to 5,475 roubles a tonne as traders secured delivery to elevators in expectation of a lifting in curbs on shipments.

Profits jump

Mr Verevskyy's comments came as Kernel revealed that the volumes of grain handled by its export terminals had near-halved, to 510,000 tonnes, during the January-to-March quarter, thanks to Ukraine's quota regime.

The group blamed a halving in its grain sales, to 393,000 tonnes, on the same issue.

However, higher prices for what was traded, coupled with a jump in bulk sales of sunflower oil, in which the group has lifted capacity through takeovers and organic growth, lifted revenues by 91% to $515.4m during the quarter.

Earnings rose 95% to $77.9m

Kernel shares, which are listed in Warsaw, rose 2.1% to 73.40 zloty in morning deals.

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