By Pavel Polityuk and Sergei Karazy
KIEV (Reuters) – Ukraine, one of world’s top grain exporters, is ready to ban wheat exports if sales exceed limits agreed with traders, the deputy economy minister in charge of agriculture told Reuters on Wednesday.
Any further restrictions of Ukraine’s grain exports could speed up trade from Black Sea producers Russia and Kazakhstan, depleting their grain export quotas earlier than anticipated.
Ukraine has exported 18 million tonnes of wheat so far in 2019/20, leaving an additional 2 million tonnes available for export over the rest of this season that runs until June 30, in line with a memorandum signed with traders.
“If the pace of exports becomes such that we are exporting 2 million tonnes in April, so, as we agreed (with traders) and warned – we will have to implement the paragraph of the memorandum to stop exports,” Taras Vysotskiy told Reuters.
“So far, the pace that we are tracking looks like we are not going to exceed these 2 million tonnes,” he said in a video interview.
Ukraine’s wheat harvest largely exceeds domestic consumption, but last month Ukrainian bakers and millers asked the government to limit grain exports to maintain bread prices.
The government said it would curb the export of some food products but so far has only halted foreign sales of the popular staple buckwheat. It has also asked parliament to approve lifting import duties on some cereals.
Disruptions to the supply chain caused by the coronavirus prompted neighbouring Romania to ban cereal exports to non-European Union destinations.
Last week Russia agreed to limit grain exports to 7 million tonnes from April to June to conserve supplies for the domestic market during the coronavirus outbreak.
Although the amount is roughly in line with what the country was expected to ship anyway in the period, Russia’s online calculator https://mcx.ru/ministry/departments/departament-ekonomiki-investitsiy-i-regulirovaniya-rynkov/industry-information/info-netarifnaya-kvota-na-zernovye-kultury shows that, as of Wednesday, only 4.8 million tonnes of grain remains available for export from the quota until June 30 and 2.2 million tonnes are already declared for export.
Kazakhstan opted to limit exports to 200,000 tonnes of wheat and 70,000 tonnes of flour in April, although it has said it could increase the quotas in the coming months.
Looking ahead, Vysotskiy said Ukraine’s 2020/21 wheat exports could fall sharply to 12-15 million tonnes from around 20 million in 2019/20 following a reduction in the sowing area caused by poor weather.
DRY WEATHER AND FROST
Ukraine has imposed strict lockdown measures to fight the spread of the coronavirus pandemic, but Vysotskiy said the restrictions had not affected the spring sowing, which had taken place at an even faster pace than a year ago.
Ukraine harvested a record 75.1 million tonnes of grain in 2019 and exports could reach an all-time high of 52-55 million tonnes in the 2019/20 season which runs from July to June, Vysotskiy said.
However, after a record harvest last year, the minister said a lack of rain during sowing late last year and unfavourable weather conditions this spring would lead to a smaller wheat harvest and lower exports.
“We had three very dry months and high temperatures and frosts. It rained across all Ukraine, which improved the situation a bit, but of course we will not match the record harvest this year,” Vysotskiy said.
Ukraine had sowed 2.7 million hectares of spring crops as of April 10, or 18% of the expected sowing area of 15.3 million hectares.
Vysotskiy said the forecast for the grain harvest for 2020 has repeatedly changed depending on the weather. It is now at 65-67 million tonnes but may drop to 60 million tonnes if the weather deteriorates.
(Additional reporting by Polina Devitt; editing by Barbara Lewis and David Evans)