Icy roads disrupt Ukraine maize exports - traders

by Reuters
Tuesday, 28 January 2014 13:50 GMT

* Cold creates transport problems for maize supply in Ukraine

* Exporters offer a bonus to farmers for in time supply

* The problem supports demand in U.S., Canada, Russia (Adds details, quotes, context)

MOSCOW/HAMBURG, Jan 28 (Reuters) - Freezing weather causing ice on roads in Ukraine is delaying deliveries of maize (corn) and prompting many buyers to turn to rival exporters, including the United States and Canada, traders said on Tuesday.

Exporters are offering up to $10 per tonne as a bonus to producers who deliver grain supplies in time to meet export contracts, they said.

The problem is adding to uncertainty in farming communities as Ukraine undergoes a political crisis that led Prime Minister Mykola Azarov to offer his resignation on Tuesday in an effort to seek a settlement after two months of unrest.

Currency volatility is adding to the problem. The hryvnia has fallen to its lowest against the dollar in four years and some farmers are holding off sales due to expectations that it could drop yet further.

"Farmers (are) not sure about the political situation and especially currency exchange rates," a European trader said.

"Local buyers are adding something to corn prices almost every day but it is still not enough to attract farmers for selling and to compensate currency difference."

Brokers say prices for Ukrainian maize for February shipments had risen to $218 a tonne on a free-on-board (FOB) basis on Tuesday from $212 a tonne a week ago.

Ukraine has exported 1.9 million tonnes of maize between Jan. 1 and Jan. 23. For the whole 2013/14 season, which started on July 1, supplies have reached 11.7 million tonnes, up from 7.5 million tonnes in the same period a year ago.

Ukraine's cold snap has supported maize prices in Russia, a Moscow-based trader said: "Cold weather is complicating the movement of maize in Ukraine and is supporting demand for maize in Russia."

A European trader said, however, that many buyers of Ukrainian corn cannot take Russian maize due to contractual restrictions although some traders have a 'book' that lets them switch.

"But this is not possible for many, so many are now delaying Ukrainian corn shipments rather than swapping origins," he said.

"Some others are looking to buy U.S. or Canadian corn and even Brazilian/Argentine for later positions."

A large foreign trader who works in Ukraine said the logistical problems were not very serious because railways continued to function. "Deep frost makes grain supply by road difficult, while the railway works without problem," he said.

Ukraine faces temperatures as low as minus 27 degrees Celsius (minus 16.6 Fahrenheit) in its north and north-east until Jan. 30, according to weather forecasters.

Another European trader said Russia was also experiencing deep cold in regions neighbouring Ukraine so even if demand is switched to Russia there could be problems with shipments.

But a representative of Russia's Novorossiisk port on the Black Sea said there were no transport problems with grain supplies from the country. (Reporting by Polina Devitt in Moscow, Michael Hogan in Hamburg, Gus Trompiz in Paris and Pavel Polityuk in Kiev; Additional reporting by Valerie Parent in Paris and Gleb Stolyarov in Moscow; Editing by Alissa de Carbonnel and Anthony Barker)

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