Ukraine farms ministry sees no need to limit grain exports

by Reuters
Thursday, 21 August 2014 12:57 GMT

* Unrest fuels concern of supply disruptions

* Rains damage quality of Ukraine wheat crop (Adds details, background)

By Natalia Zinets

KIEV, Aug 21 (Reuters) - Ukraine sees no need to limit grain exports in the 2014/15 season now underway, Yaroslav Cherevichny, the head of market monitoring at the country's agriculture ministry said on Thursday.

Investors in the global wheat market have been watching events in Ukraine as months of fighting between government forces and separatist rebels have fuelled concerns over possible disruptions to supplies.

Markets are also concerned about the overall quality of Ukraine's wheat harvest due to rain damage which should mean the country produces more wheat for animal feed and less higher grade bread-making grain this year.

"We, according to preliminary estimates, have the opportunity to export 30 million tonnes (of grains) or even more," Cherevichny said. "With these export opportunities, common sense says that no grain export limits are necessary."

Cherevichny made his remarks in response to Reuters inquiries about Ukraine's grain export potential.

The country sees its 2014 milling wheat crop at over 13 million tonnes, of which 6-7 million tonnes can be exported, he added. He said Ukraine's domestic markets needed 5.6 million tonnes of milling wheat a year.

Wheat futures on the Chicago Board of Trade closed higher on Tuesday, partly due to reports in Ukraine's local media that domestic millers were pressing the government to suspend wheat exports until more was known about domestic supplies of milling-quality wheat.

"Market participants are starting to expect calls for export restrictions in Ukraine - the loss of harvest due to the conflict is one factor," a European trader said earlier on Thursday.

"A very important factor is that a lower percentage of Ukraine's crop is expected to be of milling wheat standard," he said. "It is possible that we could see some unofficial export restrictions in Ukraine soon."

Ukraine, which has already harvested 24 million tonnes of wheat in bunker weight, has been battling a pro-Russian separatist insurgency in its eastern regions since April.

Bunker weight is the tonnage established for a crop before drying and cleaning.

The country will lose 15 percent of its grain crop in two violence-hit regions in the country's east, a spokesman for Ukrainian Prime Minister Arseny Yatseniuk said this week.

According to the International Grains Council, Ukraine exported 32.2 million tonnes of grain in 2013/14 and is forecast to export 29.4 million in the 2014/15 marketing year, which started on July 1. (Additional reporting by Michael Hogan in Hamburg and Sarah McFarlane in London; Writing by Polina Devitt in Moscow and Alessandra Prentice in Kiev; editing by Keiron Henderson)

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