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Restrictions Tighten on Ukraine Grain Exports

11 February 2011
USDA Foreign Agricultural Service

UKRAINE - The Government of Ukraine announced now requires all export contracts to be registered at the State designated Exchange starting.

Grain traders fear this is another move to restrict exports and an escalation of restrictions into the oilseed sector.

All export contracts for a variety of agricultural commodities including wheat, corn, barley, soybeans, sunflower seeds and oil, rapeseeds, and others must be registered with the GOU in order to be concluded.

The Government of Ukraine has restricted grain from leaving ports since late summer 2010 when the GOU began requiring new and unprecedented steps for certifying that actual physical grain loaded on vessels in ports of Ukraine matched corresponding contract specifications, according to teh USDA Foreign Agricultural Service.

That requirement was replaced by quantitative restrictions on October 18, 2010 when the first export quota was announced for wheat, barley, corn, rye, and buckwheat.

A total of two official quota announcements were issued to date and allocations of quotas were distributed. In addition, in the last few weeks media quoted GOU officials, the Minister of Agrarian Policy and Food (MinAg) in particular, saying that the grain export quota quantities may be increased in the coming month and that the quota regime may be abolished as of April 2011.

The latest projection for quota increase according to Minister Prysiazniuk is for an additional 1 million metric tons (MMT) of wheat and 1.7 MMT of corn.

According to grain traders, they suspect that the latest GOU announcement about the mandatory registration of export contracts at the state controlled Agricultural Exchange and its designees is another threat to their ability to freely engage in export activities in Ukraine.

The list of commodities which are subject to registration is much longer than the list of commodities declared to be subject to grain export quotas in Ukraine this year.

Moreover, Director of the State enterprise Khlyb Investbud - Robert Broudi – informed the public at a press conference on 26 January 2011 that the company intends to export over 2 MMT of grain by current Marketing Year end.

Grain would be exported under the intergovernmental agreements to Belorussia (600,000 Metric Tons), Russia (500,000 MT), Armenia (300,000 MT), and Georgia (150,000 MT) and some would be exported under private contracts.

He also indicated that the company has over 2 MMT of grain in stock (no specifics as to the kind of grains and quantities were released). Khlyb Investbud is becoming an active trading division of a larger State-run enterprise State Food and Grain Corporation of Ukraine.

Earlier, at the grain export quota distributions Khlyb Investbud obtained 22.4 per cent share of wheat quota (224,048.05 MT out of 1,000,000 MT), and 21.8 per cent share of corn quota (653,023.91 MT out of 3,000,000 MT).

Also, it was recently announced that Khlyb Investbud is seeking financing in the amount of $125 million for its grain operations. This financing would come as loans from State operated banks, while collateral would be grain stocks held by the Agrarian Fund.

TheCropSite News Desk

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