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Industrials

UPDATE 1-China ships Ukraine grain under loan/export programme

* Ukraine uses Chinese loan to buy grain for exports

* State company wants to export wheat to China

* Ukraine firm sees high flour exports to Middle East (Adds quotes, details, background)

KIEV, June 19 (Reuters) - A Chinese state company has started a programme of purchasing grain from Ukraine’s state-run grain corporation for export to clients in China, the Middle East and markets further afield, the Ukrainian chief executive said on Wednesday.

Ihor Yakubovych, head of the state grain and food corporation (GPZKU), said the first shipment under the deal with China was for 75,000 tonnes of wheat to Egypt and Syria and that an additional shipment of 25,000 tonnes was planned to a Mediterranean destination.

Ukraine is a major producer and exporter of wheat, maize and barley with competitive prices that make it attractive for the huge Chinese market.

Under a deal agreed last year with China, GPZKU obtained a $1.5 billion loan to finance improvements to the former Soviet republic’s agriculture.

In line with the loan conditions, GPZKU is exporting its grain via Chinese operator China National Machinery Complete Industry Engineering Corporation.

GPZKU plans to buy up 4 million tonnes of produce from the 2013 harvest using Chinese funds and expects exports of 2 million tonnes by the end of the year, Yakubovych said.

He said the company from July would be ready to buy grain from Ukraine farmers from the 2013 harvest for export.

“We will start exports as soon as grain from the new harvest appears on the market - wheat in July-August and later maize,” Yakubovych said. “Maize will dominate, but the proportion of sales will depend on situation on the market”.

Yakubovych said GPZKU had already bought 550,000 tonnes of maize and about 50,000 tonnes of wheat via forward contracts. Another 3.4 million tonnes of grain are likely to be bought on the spot market.

He said Ukraine had already met all the requirements to ship maize to China’s domestic market and also would supply it with wheat, barley, soybeans and other commodities once it had received authorisation from the Chinese side.

Ukraine has forecast a harvest of 53-54 million tonnes of grain this year, 2 million tonnes below the record harvest of 56 million tonnes in 2011.

Agriculture Minister Mykola Prysyazhnyuk said this month grain exports might rise to a record 27 million tonnes in 2013/14, compared with 23 million tonnes in 2012/13.

Private Ukrainian traders, independent of the GPZKU, typically account for the bulk of grain exports.

Yakubovych said the corporation, which operates two large grain export terminals, 24 silos and 17 mills, planned to increase flour exports in the July 2013 to June 2014 season.

“Export of 50,000 tonnes is a real prospect for this year. There could be (shipments to) Syria, Libya, Egypt,” he said.

Ukraine exported about 150,000 tonnes of flour in 2012, and Yakubovych said his company could dominate Ukrainian flour exports in the future with annual shipments of 100,000 tonnes. (Reporting By Pavel Polityuk; editing by Richard Balmforth and Jane Baird)

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