Wheat Exports Banned by Ukraine
On Friday 19 October wheat futures rose to a one-week high after traders said Ukraine is preparing to ban wheat exports starting from mid-November.
**Ukraine – A Lead Supplier Out of the Market**
The Financial Times reported that Ukrainian traders were told of the incoming ban on Friday morning although the government has not made any official announcements yet.
“The government does not want to be accused of market interference by unilaterally banning exports, as they have done in the past. So they are seeking mutual agreement with traders through memorandums,” a grain operator said as quoted by the FT.
Ukraine is one of the top-ten world wheat exporters and is part of the Black Sea region, which accounts for a quarter of global exports of the commodity. As of now it is unclear whether the restrictions will apply only to future deals or will come in the way of already existing commitments. According to grain traders, there will be another meeting in the beginning of November when Kiev will clarify the exact rules of the possible wheat-export ban.
Chicago December wheat rose 1.6 percent on Friday reaching a one-week high of $8.83-3/4. Benchmark November milling wheat was up €2.75 or 1.06 percent to €262.50 a tonne. The gains on the market were moderate as most grain operators had already anticipated some form of export slowdown from Ukraine.
“We were expecting indirect restrictions, a firm encouragement or an instruction perhaps. I’m not sure ‘ban’ is the right word,” said a European trader for Reuters.
**Russia’s Grain Stocks Down**
Russia’s wheat crop is down by 26 percent from last year as the harvest nears its completion. The state statistics office said that grain stocks at large farms and processors were about 35.8 million tonnes on Oct. 1 compared to 45.3 million last year.
!m(/uploads/story/618/thumbs/pic1_inline.png)Russian president Vladimir Putin, who approved a decision in 2010 to ban grain exports until July 2011, has said no export restrictions are currently under consideration by the government.
According to Russian officials, the 2012 drought was not as devastating to the crops as in 2010 but overall legume and cereal yields are estimated to be lower than in the 2010-2011 crop year. By October 19 Russia reaped 39.5 million tons of wheat and its harvest was 99 percent complete.
With Ukraine banning its exports, traders are now primarily concerned with whether Russia will be able to meet its domestic needs and at the same time keep the exports flowing.
**Black Sea Region Grain Exporters**
The combined 2012 grain harvest of the Black Sea region countries is expected to be 130 million tonnes or 27 percent lower year-on-year due to the drought.
Kazakhstan, the Black Sea region’s top producer of hard wheat, last year reached a post-independence record crop of 27 million tonnes by clean weight but this year forecasts are pessimistic with a harvest of only 13 million tonnes. Kazakhstani officials have declined to give any estimates for the 2012 harvest.
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