Ukraine anticipates one of its biggest crops in 10 years. Domestic prices are decreasing, and the government is trying to boost the price of wheat by purchasing stocks for the state reserve, according to Resource Investor. While July grains export numbers are high, traders slowed purchases based on expectations that prices will continue to decrease.
The Government of Ukraine (GOU) is watching the grains harvest and markets very closely. It hasn’t yet interfered with the market but the Prime-Minister’s office has started saying that that they are not pleased with the prices, which are going down due to an abundant crop. Today’s GOU policy is intended to benefit producers.
The GOU plans to form a State Food Fund and procure up to 14% of the annual consumption. More specifically, the Prime-Minister announced that the Fund plans to purchase 800,000 tons of wheat and 78,000 tons of rye in marketing year 2008/2009.
The GOU has also decided on two measures to support grain infrastructure this year. First, the GOU will compensate the interest rates to companies and individuals who build inland silos. The other plan is to sell certain old silos that belong to the state company “Bread of Ukraine” and to build new silos which will be used for storage of purchased grain as a strategic reserve.
According to the State Statistic Committee, as of August 1, were harvested 4.495.000 ha of wheat. This amount brings production amounts to 16,544,000 tons with a yield of 3.68 tons/ha. Wheat production is higher by 24% and yield increased by 47% compared to the same date of last year.
Barley harvested area is 2,857,000 ha; production is 8,945,000 tons with a yield of 3.13 tons/ha. Barley production is higher by about 40% with a yield two times last yield.
Prices for all major grains are decreasing due to high production and supply from farmers. Trading companies are slowing down their purchases due to expectations that the price could continue to go down.
ExportFollowing the cancellation of grain export quotas, export volumes increased exponentially in June and July 2008. Official Ukrainian statistics show grain exports in June 2008 totaled; wheat = 483,000 tons, barley = 413,000 tons and corn = 486,000 tons. Total July-June wheat exports totaled 911,000 tons; barley exports totaled 1,040,000 tons and corn 1,600,000 tons. Official Ukrainian statistics show grain exports in June 2008 totaled; wheat = 600,000 tons, barley = 800,000 tons and corn = 274,000 tons. Please refer to the grain export tables (by month and destination) in the Statistical Tables Section.
June 2008 grain stocks are 44% higher than June 2007 grain stock levels. According to inland silo industry information, silos are currently at full capacity, much higher levels than for an average year. The owners of these silos are also expecting to have some difficulties accommodating grain from the new record high crop. One time storage capacity of inland silos is estimated to be approximately 25-28 million tons for all crops, including oilseeds. Total 2007/2008 grain stocks amounted to 6.7 million tons on June 1 and about 0.7 million tons of oilseeds.