Ukraine blocking wheat exports: Businessmen capitalize on the situation

Ukraine’s authorities and representatives of business are blocking wheat exports from the country.

Though the wheat export is not officially banned, it is in fact impossible to export as the market players themselves are not interested in doing so. They propose the authorities imposing a ban on wheat export, which will enable them to annul their contracts - currently deemed as having unfavorable terms - pointing to force majeure situation, according Russian daily Komersant.

This comes after Russia's Prime Minister Vladimir Putting signed a decree last week imposing a ban on wheat exports from Russia, pointing to drought and wildfires that have devasted parts of the country.

At the same time Ukraine's wheat harvest and exports forecasts for 2010/11 have been cut due to extreme weather, analysts
and agriculture officials said on Monday.

Leading wheat production areas in Ukraine, the world's sixth-largest wheat exporter in the 2009/10 season according to the U.S. Department of Agriculture, was hit by severe frosts this winter and extreme heat in July-August.

Bad weather has decimated crops in other key producers, with Russia and Kazakhstan severely hit by drought, and major exporter Canada cutting back acres because of excessive rain at planting time. Russia last week banned grain exports.

UkrAgroConsult agriculture consultancy cut its forecast for Ukraine's wheat harvest to 17.75 million tonnes from a previous estimate of 18.60 million and its 2010/11 exports outlook to 5.95 million tonnes from 7.10 million.

"Wheat yields are lower than we expected before because of the very hot weather," Elizaveta Malysh from UkrAgroConsult told Reuters.

Ukrainian Agribusiness Club also cut its wheat harvest forecast for 2010 to 17.50 million tonnes from 18.06 million and its exports forecast to 6.0 million tonnes from 6.8 million.

A senior Ukrainian Farm Ministry official said this year's wheat harvest could fall to about 17 million tonnes in clean weight from 20.9 million in 2009. This was well above Ukraine's annual domestic consumption of 12 million tonnes.

"This year's wheat harvest could reach 17 million tonnes and more than a half of the crop will be food quality wheat," the official told Reuters on condition of anonymity.

Ukraine exported more than 9 million tonnes of wheat in the 2009/10 season, which runs from July to June.

"Despite any forecast, we will follow the global price trend which is at present determined by panic in reaction to the Russian grain export ban," said analyst Mykola Vernitsky from ProAgro consultancy.