Ukrainian Grain Market

AGRO PERSPECTIVE «Ukrainian Grain & Oilseed Market » March 31, 2011`12`(317)

As earlier, within this week food wheat was purchased only by processors; exporters and other market participants were focused on Parliament activity in grains market prices State regulation sphere.

It is to be admitted, still on Mar 29 Ministry of Economic Development and Trade (MEDT) representatives had declared in mass media reports that Cabinet wasn’t going to elaborate any draft Decree on Ukrainian grains export quoting regime prolonging or canceling. Besides, Iryna Akimova, Presidential Administration Staff First Deputy Chief, reported President Viktor Yanukovych had demanded that MEDT should have worked out special legislative act which would permit to introduce customs control measures in order to substitute grains export quotas after their efficiency period termination. However, already on Mar 30 MEDT official website published Cabinet draft Decree “About Bringing Changes Into Ukrainian Cabinet Decree № 938 from Oct 04/10" stipulating that Ukrainian grains export quoting regime should be prolonged until Jul 01/11 with maize export quotas to be enlarged additionally by 2 mn MT.
As of this week, Ukrainian feed wheat reserves remained rather low; feed wheat was purchased mainly by mixed feeds plants. As earlier, within this week feed wheat prices remained rather high.
In meanwhile, as to Bloomberg agency data, Saudi Arabia is ready to start looking for possibilities to purchase feed barley in other countries if Ukraine prolongs its grains export quotas. Experts say in 2011 Ukrainian will raise its feed barley output to 10.0–10.5 mn MT (up against 2010 8.5 mn MT), — so it will be disadvantageous for our country to enhance feed barley export and at same time lose its main export markets. However, experts admit if Ukrainian feed barley export prices are much down against other countries (e.g. Australia) similar, Saudi Arabia is certain to resume purchasing from Ukrainian companies even despite its negative attitude to fact of Ukrainian grains market State regulation. 

EXPORT

• Barley 

As earlier, within reporting week feed barley market trade activity remained low due to processors slack demand; it is to be admitted, no trader made feed barley purchases. 
As of this week, feed barley purchase prices remained same as within previous week:  UAH1,850–2,000 per MT (EXW-ex-elevator, depending on regions/lots).
Within reporting week feed barley US$ purchase prices were US$265–275 per MT (FOB Black Sea ports: Pivdenniy, Illichivsk, Odesa).

• Wheat     

Within reporting week traders didn’t make any feed wheat purchases. As of this week, feed wheat market prices ranged within UAH1,800–1,900 per MT (EXW-ex-elevator, depending on regions).                                                         
Within this week feed wheat FOB basis export prices fluctuated within US$300–310 per MT. 
As of this week, domestic market 3 and 2 classes food wheat prices were correspondingly UAH2,080–2,200 per MT and UAH2,100–2,250 per MT; at same time, 3 and 2 classes food wheat export prices (if global market prices conjuncture is taken into account) were correspondingly US$340–365 per MT (FOB Black Sea ports) and US$330–340 per MT (FOB Black Sea ports, depending on protein content). 

Maize 

Within reporting week feed maize market purchase prices fluctuated depending on seller status (middleman or producer), shipments regions and contract conditions, — UAH1,900–2,000 per MT (EXW-ex-elevator). It is to be admitted, traders were ready to pay UAH2,050–2,150 per MT for big lots in ports.
As of this week, feed maize export prices ranged within US$300–310 per MT (FOB Black Sea ports).
Wide ranges of above-mentioned feed maize prices are motivated by fact that trade companies have started declaring 2 purchase prices levels: high level (for agricultural producers) and low level (for middlemen) after new Ukrainian Tax Code having had come into force.

*- protein content: minimum 12.5%
**- protein content: minimum 11.0%

Processors Activity    

As of this week, flour millers kept their food wheat purchase prices unchanged against previous week.
Most experts believe Ukraine flour market is going to significantly slacken in near future as grain holders have already considerably raised wheat offer in all regions (even despite spring sowing campaign having had started just few days ago).    
 Flour milling integrated plants experts admit within this week wheat shipments to integrated plants were sufficient in all regions (save for western regions and eastern regions some districts). Integrated plants experts say grain holders have recently become much more eager to reduce their sale prices, — what is to be explained with Government having had decided to prolong grains export quoting regime until new market season. In fact, wheat prices are quite likely to start declining as soon as wheat offer will significantly exceed demand. However, at same time experts admit within this week some wheat holders remained quite reluctant to sell their wheat reserves (especially high-quality wheat holders). 
On rye market, within this week flour millers couldn’t produce initially planned flour volumes due to rye deficit even despite market high demand. Besides, rye flour sale prices have significantly grown against previous week. It is to be admitted, within this week rye purchase prices have already reached food wheat similar; in some regions, rye purchase prices have boosted even to UAH2,050–2,100 per MT.

Average purchase prices for food grains (ÑÐÒ processing plant), UAH/ò
Region	30.03.11		23.03.11		February 2011 average	January 2011 average	December 2010 average
	Min	Max	Min	Max
2nd class wheat*
Western	2100	2400	2100	2400	1945	1735	1690
Northern	2150	2300	2100	2300	1975	1765	1720
Central	2100	2300	2100	2280	1985	1760	1705
Southern	2100	2280	2100	2280	2005	1760	1700
Eastern	2100	2300	2100	2300	2000	1775	1725
3rd class wheat**
Western	2080	2250	2050	2250	1880	1675	1610
Northern	2080	2220	2050	2220	1910	1695	1635
Central	2080	2220	2050	2220	1925	1690	1625
Southern	1950	2200	2050	2220	1940	1700	1645
Eastern	2050	2220	2050	2220	1935	1695	1635

*- protein content: minimum 12.5%
**- protein content: minimum 11.0%

14.04.2011