October 31, 2012 / 2:55 PM / 7 years ago

UPDATE 1-Ukraine softens wheat export ban stance

(Adds traders comments)

KIEV, Oct 31 (Reuters) - Ukraine’s Agriculture Ministry on Wednesday softened its position on a wheat export ban this season, saying it will consider all “necessary measures” if the country’s wheat stocks fall to a critical level.

Last week Agriculture Minister Mykola Prysyazhnyuk said the former Soviet republic would ban wheat exports from Nov.15 due to a high pace of wheat exports and a fall in the harvest due to poor weather, but his deputy said on Wednesday the move was not on the agenda.

“We will apply the necessary measures if a critical shortage of food grain appears,” Interfax Ukraine news agency quoted Ivan Bisyuk as saying.

“At the present moment we see no critical state with food grains,” he said.

The ministry was unavailable for comment, but traders said that some curbs were likely as the country did not have enough grain in stock to keep exports at the present high level.

“There is no doubt that some kind of limits will be imposed. The question is what limits these will be and, unfortunately, it could be informal limits,” one large foreign trader said.

“It looks like the final decision has not been made and the government is considering its next steps,” another trader said.

The ministry last week said that it would allow traders to fulfil all existing wheat export contracts, which, according to the ministry’s data, totalled about 5.4 million tonnes.

The volume includes two shipments by Egypt’s GASC, the country’s main state wheat buyer. The group bought 55,000 tonnes of Ukrainian origin wheat in mid-September as part of a larger tender purchase for shipment Nov. 21-30.

Another 55,000 tonne consignment was also purchased on Sept. 11 by GASC as part of a 235,000 tonne deal for Nov. 11-20 shipment.

Egypt, the world’s top wheat buyer, said on Tuesday it has not removed Ukraine from its list of potential wheat suppliers despite the upcoming export ban by the Black Sea country.

Nomani Nomani, vice chairman of GASC, said Ukraine’s decision to stop wheat exports on Nov. 15 was not considered to be official because it had not been confirmed by the country’s prime minister.

“The Farm Ministry has decided to avoid conflicts with international trade organisations and the export limits will likely be informal,” said Mykola Vernytsky from ProAgro consultancy.

Ukraine in the 2010/11 season imposed informal export barriers, such as complicated customs requirements and red tape, to prevent wheat exports after a disappointing harvest. Exporters faced huge costs from failing to meet contracts.

LARGER VOLUME

According to the ministry, Ukraine has exported 4.06 million tonnes of wheat so far this season, including 1.44 million tonnes in October and 1.32 million tonnes in September.

The ministry said earlier this month it had agreed with traders that the wheat exports would not exceed 5.0 million tonnes this season.

But traders, who have repeatedly said that Ukraine could export at least 5.5 million tonnes of wheat this season, said on Wednesday that they had reached an agreement with the government to increase the volume to 5.5 million tonnes from 5 million.

They also said that the Farm Ministry had promised to avoid imposing any export limits until December 1.

“Traders and the ministry, in accordance with the memorandum, have agreed to increase the maximum amount of wheat for exports in the 2012/13 season to 5.5 million tonnes,” Serhiy Stoyanov, director of the Ukrainian Agrarian Confederation grain lobby said.

He added that the exports 5.5 million tonnes of wheat could be made without threat to the domestic market.

Ukraine, which harvested 15.5 million tonnes of wheat in 2012, consumes about 12 million tonnes per season. (Reporting by Pavel Polityuk; editing by Anthony Barker and Keiron Henderson)

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