Ukraine to consider lifting wheat export curbs next month

Ukraine will decide next month whether to lift restrictions on wheat exports that were imposed after a poor harvest last year, Agriculture Minister Mykola Prysyazhnyuk said on Wednesday.

The ministry has capped exports at 6.3 million tonnes in the current season, which runs to June 2013.

"We could discuss the issue around April 10," Prysyazhnyuk told reporters when asked about the government’s plans to review the restrictions.

He said the ministry’s decision will depend on the condition of the winter wheat crop, which accounts for more than 95 per cent of Ukraine’s total wheat output.

"We will see how spring starts. We could lose some winter grain crops if the weather is too hot. If the spring is mild, we could preserve… 92 per cent of crops (which have passed through the cold season)."

Ukraine, the world’s eight-biggest wheat exporter in 2011-12, harvested 15.8 million tonnes of wheat in 2012 versus 22.3 million in 2011.

Worried about a potential deficit, the government forced traders to limit wheat exports to 5.5 million tonnes in the 2012-13 season, although it later raised the cap to 6.3 million tonnes.

So far in the current season wheat exports have reached 6.179 million tonnes, according to the ministry.

Doubts

Traders say that lifting the cap could allow them to export an additional amount of up to 800,000 tonnes this season.

Analysts say, however, that Ukraine is unlikely to allow free exports of wheat in the current season because of its very low stocks.

"According to our estimates, Ukraine can export no more than 6.5 million tonnes of wheat this season. In this case, wheat stocks could total about one million tonnes — which is close to a critically low level," Mykola Vernytsky from the ProAgro consultancy said.

Vernytsky said the government was most likely to allow exports of just a handful of separate parcels of wheat, sold to traders by the state-run Agrarian Fund.

In January the fund sold about 225,000 tonnes of soft milling wheat, which buyers were allowed to export, for about US$61.5 million.

Prysyazhnyuk said that an additional 150,000 to 200,000 tonnes would be offered in a similar tender later this month.

Traders, however, said the government could open borders in May to free up silos before the arrival of the wheat harvest, which is expected to be 19 million to 21 million tonnes.

"Maybe it is worth opening exports in May in order to free farmers from the surplus," a large foreign trader said.

"But I do not think that there will be a lot of wheat for sale." (editing by Jane Baird)

— Pavel Polityuk is a Reuters correspondent based in Kiev.

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