Ukraine is likely to cut its grain exports in the 2010/11 season to 16 million tonnes from 21.5 million in 2009/10 due to a smaller harvest in 2010, the presidential press service said in a statement. Severe winter frosts followed by record high summer heat have destroyed at least 700,000 hectares sown with barley and wheat, two Ukraine's major export commodity.
In April-May the government had forecast the exports at 22-24 million tonnes, but in June it cut the outllok to 18-20 million, saying some regions could lose some crop due to rainstorms. Analysts also said drought in Russia would increase foreign demand for Ukrainian grain and the government would face a tight competition with traders to buy grain in state stocks.
President Viktor Yanukovich on Thursday urged the Agriculture Ministry to buy in stocks up to 4.5 million tonnes of grain from the 2010 harvest to ensure population has enough bread. The ministry has said it planned to raise its purchase prices to buy enough grain in stocks. Ukraine plans to harvest about 42 million tonnes of grain in 2010. The wheat crop is likely to total 18 million tonnes, including about 6 million of milling wheat. The country of 46 million consumes 6 million of food wheat per season.
The absence of a milling wheat surplus this year has triggered market speculation the government could impose export restrictions this season, but Farm Minister Mykola Prysyazhnyuk this week said the government would not impose any trade limit. Analysts have said that free grain export regime allows traders to sell abroad at least 3.0 million tonnes of milling wheat this season, leaving the state grain reserve without significant supply.