The Ukrainian agriculture ministry and traders have agreed to cap wheat exports at 16.6 million tonnes this season, leaving enough stock to meet domestic demand, Minister Oleksiy Pavlenko said on Thursday. State forecasters have said severe drought across half of Ukraine hit winter sowing and could sharply reduce the 2016 wheat harvest. Analysts and traders see the 2016 harvest at between 14 and 17 million tonnes.
According to ministry estimates, Ukraine may lose about 12 million tonnes of wheat next year in the worst case scenario. But Pavlenko said the government was unlikely to cut the volume of wheat available for exports this season. "We allow the market to complete this season with the agreed figure," Pavlenko told Reuters. "And next season we will put in the memorandum a new and fair volume," he said, referring to an annual memorandum that the government signs with traders on how much they can export Ukraine is likely to harvest 60 million tonnes of grain this year, including 27-28 million tonnes of wheat and 22-23 million tonnes of maize, according to ministry estimates.
Pavlenko said total exports could hit a record 36 million tonnes in the 2015/16 July-June season compared with 34.9 million tonnes in 2014/15. Earlier on Thursday a source in the ministry said the wheat export limit could be reviewed depending on the outlook for next year's winter harvest, which may fall sharply due to unfavourable weather during the autumn sowing.
A senior agriculture ministry source said this week that Ukrainian wheat exports in 2016/17 could fall to about 3.5 million tonnes due to poor weather, from expected sales of 16.5 million tonnes in 2015/16. The government has increased the minimum level of wheat stocks to 2.5 million tonnes from 1.6 million tonnes last year. "I think we have enough wheat in stocks to ensure our food security," Pavlenko said. The ministry and traders also agreed a wheat export cap in the third and fourth quarters of this season.