Black Friday is Now! Don’t miss out on up to 60% OFF InvestingProCLAIM SALE

WRAPUP 3-Ukraine grain delays persist, Russia ban to late 2011

Published 09/07/2010, 02:15 PM

* Ships carrying 379,647 T of grain, mostly wheat for export

* Traders say total blocked volume is much higher

* Russia says has enough grain to cover needs

* Russia confirms grain ban in place to after 2011 harvest

* Egypt to avoid 2008-style food unrest

(Recasts with Russia clarification on ban duration)

By Pavel Polityuk and Denis Dyomkin

KIEV/MOSCOW, Sept 7 (Reuters) - Major exporter Ukraine is holding ships carrying a month's grain supply in its ports, traders said on Tuesday, while Russia said it had enough grain to feed itself but would maintain an export ban until late 2011.

The Russian statement could bring some clarity and reassurance to a market frustrated by conflicting statements from a country that before this summer's record heatwave and resulting drought was the world's third largest wheat exporter.

Ukraine's Customs Service, reacting to lower harvests after severe weather and increased demand in the absence of Russian sales, has blocked in ports 24 vessels bound for export carrying 379,647 tonnes of grain, mostly wheat, traders' union UZA said in a statement on Tuesday. "According to the latest data, about 20 ships are staying in ports without official explanations. Some of the ships have been in port for more than one and half months," UZA said.

But traders said the real volume of grain held back at ports could be much higher.

"The data provided by UZA is just a tip of the iceberg and this is just 25 percent of the real volume. UZA counts ships of large exporters only, while there are also many ships of small traders in ports," a large Ukrainian trader told Reuters.

The Ukrainian government last month proposed limiting exports of the two key commodities wheat and barley to 2.5 million tonnes between September and December but has put off a final decision until October.

RUSSIA OFFERS SOME CLARITY

Russia on Tuesday sought to remove uncertainty over the fate of its grain export plan, with the Kremlin clarifying that the embargo -- introduced on Aug. 15 and originally slated to end on Dec. 31, 2010 -- would remain in place until after next year's harvest has been collected.

The statement followed Russian President Dmitry Medvedev's comments on Monday that the export ban might be lifted earlier than the end of this year, which appeared to contradict Prime Minister Vladimir Putin, who has said it may be extended to late 2011..

"When speaking about the possible cancellation of the ban on the export of grain, the president meant next year's harvest," the Kremlin spokesman told reporters.

The clarification should be welcomed by traders, who had been frustrated by a string of conflicting statements from Russia and the resulting see-saw moves in grain prices.

However the size of Russia's grain stocks -- and whether it would need to import wheat this year -- remained unclear.

Agriculture Minister Yelena Skrynnik said Russia had enough grain to feed itself, revising up the carry over grain stocks estimate to 26 million tonnes from 21.7 million. This appeared to contradict Medvedev's comments on Monday that the country would need to look for grain -- which are also in line with analysts' expectations.

The Kremlin and top economic officials have been at pains to reassure the public, already feeling the inflationary effects of the drought and worried about shortages.

"There will be enough grain for food and for the feeding of animals," Interfax news agency quoted Skrynnik as saying.

Russia plans to harvest 60-65 million tonnes of grain in 2010 compared to 97 million in 2009, and, according to official estimates needs around 77 million tonnes to meet domestic needs.

NO REPEAT OF FOOD RIOTS?

Ukrainian agriculture officials have said that turmoil on the local grain market is a result of Russia's decision to ban exports after its record drought slashed grain crops.

They said foreign traders could accelerate grain exports from Ukraine in a bid to cover an absence of Russian produce on the world's market and this could leave Ukraine without enough wheat to cover local needs.

Uncertainty about Russia's grain output and the duration of its export ban had sent prices soaring on international grain markets, with key wheat prices hitting two-year highs early in August, although well below 2008 levels when concerns over food shortages sparked riots in a number of countries.

Analysts said Egypt, a major buyer of Russian wheat forced to look elsewhere for grain, was unlikely to face 2008-style disorder over food supplies.

"I do not see the situation escalating to public unrest and riots similar to what happened in 2008, because international wheat prices are not rising to 2008 levels," said Magdy Sobhy at the Al Ahram Centre for Political and Strategic Studies.

The UN's Food and Agriculture Organisation Assistant-Director General Hafez Ghanem reiterated FAO comments last week that the world was not headed for a repeat of the 2007/2008 food crisis and said the international community should act together to tackle future volatility.

"Given the importance of food markets in fighting hunger and ensuring economic stability FAO feels that the international community, perhaps under the leadership of the G20, should start looking at ways of dealing with higher volatility," he said.

The FAO has called an emergency meeting for Sept. 24 in Rome for governments to confront weaknesses in the global food system and find ways to boost reserves. (Writing by Toni Vorobyova; additional reporting by Aleksandras Budrys; editing by Keiron Henderson)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.