Traders expect decision soon on Ukraine wheat export policy

Tue Nov 13, 2012 4:03am EST

* Wheat exports are near maximum agreed volume

* Wheat crop fell by the a third due to bad weather

By Pavel Polityuk

KIEV, Nov 13 (Reuters) - Ukraine's authorities are only a few steps away from making a decision on whether they should limit exports of wheat to ensure that the population has enough cheap bread, analysts and traders said on Tuesday.

According to a letter from the Agriculture Ministry obtained by Reuters, the ministry has informed traders that the exports of wheat have almost reached the maximum volume originally agreed by officials and exporters for this season, which runs to end-June 2013.

"The decision on future wheat export policy must be adopted as soon as possible," a large foreign trader said.

In August, the ministry and traders agreed that wheat exports could not exceed 4.0 million tonnes this season, but in October the maximum volume was increased to 5.5 million tonnes.

The official data show that Ukraine exported 4.78 million tonnes of wheat as of Nov. 12 and that an additional 617,000 tonnes would be shipped abroad in the near future.

It showed that 303,000 tonnes of wheat were already loaded into vessels and another 314,000 tonnes were collected in port silos for forthcoming shipments.

"I'm sure that the export of wheat will be stopped from Dec. 1, but it is still unclear when the ministry could make the decision," said analyst Yelizaveta Malyshko from UkrAgroConsult consultancy.

Grain traders union UZA said last week the Ukrainian government could introduce curbs on wheat exports early in December but feared that instead of an official ban it might opt for informal restrictions.

Grain traders prefer a clear-cut ban, because unofficial barriers, which involve increased red tape, tend to favour some privileged companies, which could hurt Ukraine's image as a world trader.

Ukraine in the 2010/11 season imposed informal export barriers on wheat after a disappointing harvest. Exporters faced huge costs because they failed to meet contracts.

Agriculture Minister Mykola Prysyazhnyuk said last month the government would halt wheat exports from Nov. 15 due to a fall in the harvest to prevent a rise in domestic bread prices.

Subsequently after criticism from the European Union and Ukraine's main importers, the ministry softened its talk of an outright ban. It said it would apply "necessary measures" to limit sales if a critical shortage of food grain appeared.

The former Soviet republic consumes 12 million tonnes of wheat, including 4.7 million tonnes of food wheat, per season.

The wheat harvest fell by a third to 15 million tonnes in 2012 after a drought during the sowing and severe frosts in the winter. (editing by Jane Baird)

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