Ukraine puts ‘unofficial lid’ on wheat exports

(AgriMoney) – Curbs in wheat exports have returned to the former Soviet Union after all in the form of unofficial curbs on Ukraine shipments, in face of dire prospects for the 2012 harvest, the US Department of Agriculture said.

Russia, the region’s top exporter, two weeks ago eased concerns over resuming its own trade curbs, in lifting to 27m tonnes, from 23m-25m tonnes, a ceiling for grain shipments this season.

However, Ukraine, once known as the breadbasket of the former Soviet Union, appears to have limited its own shipments by striking “non-official agreements” with state traders to focus on corn shipments instead, USDA officials said.

‘Unofficial lid’

“Bureaucratic barriers and severe winter conditions–low temperatures, high winds and ice in the ports–have been identified as the main obstacles to exporting wheat,” the USDA said.

“However, those hurdles have not impeded corn exports that gallop ahead at a pace unheard of before.”

With Ukraine’s wheat stocks seen ending 2011-12 at twice average levels, “there seem to be no economic reasons” for the country’s exports of the grain lagging so far behind the historical pace.

“An unofficial lid has likely been applied to wheat exports,” to protect supplies of a grain “expected to be in short supply next season following substantial damage to winter crops”.

‘Does tick some boxes’

Indeed, such an agreement would boost the chances of Ukraine avoiding a wheat shortfall in 2012-13 even if autumn sowings, damaged by drought and extreme cold, emerge from winter in as poor shape as expected.

Mykola Azarov, the Ukraine prime minister, last week forecast that 3.5m acres of winter grains, more than 40% of the sown area, will be reseeded with spring crops.

And such an arrangement would also limit the chances of political fall-out, after exports quotas in 2010-11, and levies in the early months of this season, provoked criticism from international buyers and Ukrainian farmers.

“Politically, it does tick some boxes for Ukraine. But it also shows again the difficulties you are dealing with if you try to rely on Black Sea wheat for supplies,” a UK grain trader told Agrimoney.com.

“It is often cheap. But some would say ‘cheap for a reason’.”