PARIS - U.S. and European wheat futures rose to one-week highs on Friday after traders reported that Ukraine would ban wheat exports from mid-November, taking one of the world's leading suppliers out of the market for the rest of the season.
Prices quickly trimmed their gains, however, as the move was not immediately confirmed by the authorities
and with grain operators already anticipating some form of export slowdown from Ukraine in view of its
shrinking surplus.
Traders in Ukraine said on Friday that the agriculture ministry was banning wheat exports from after Nov.
15 in response to its weather-hit harvest.
December wheat on the Chicago Board of Trade was up 1.5 percent at $8.81-1/4 a bushel by 1010 GMT,
after reaching a one-week high at $8.83-3/4 following the report from Ukraine. It had earlier traded flat to
lower during Asian trading hours.
In Europe, November milling wheat was up 1.1 percent at 262.50 euros a tonne, off an earlier
one-week high of 263.75 euros.
“You saw the initial reaction of the market, it was higher, but we’re off the highs so I don’t think it’s a
surprise that there’s some sort of restriction out of the Ukraine, the market has been anticipating this,” said
a European trader.
Grain operators have been expecting both Ukraine and neighbouring Russia to fade from export markets in the
coming weeks after poor weather cut their harvest supply, whether through government measures or market forces.
Traders in Ukraine said the government maintained its target for 5 million tonnes of wheat exports in the
2012/13 season.
It was not clear if the export halt applied to new sales or shipments of existing contracts. Ukraine has
already exported 3.5 million tonnes of wheat this season.
“We were expecting indirect restrictions, a firm encouragement or an instruction perhaps. I’m not sure
‘ban’ is the right word,” another European trader said.
“The question now is what Russia is going to do, because they have exports to execute in December and
beyond,” he added.
Other operators said Ukraine’s limited export availability after this year’s poor crop was already fully
priced in.
“They have very little room left to export, it’s almost a non-event,” a European futures broker said of
Ukraine.
Wheat markets had been supported earlier this week by concerns over dry conditions in the United States and
Australia, also major exporters.
The strength in wheat prices helped corn futures to turn higher and soybeans to steady after earlier falls.
Soybeans have risen in each of the past three sessions, recovering from a 3-1/2 month low earlier this
week, putting it on course for its first weekly gain in more than a month.
The approaching end of the corn and soy harvests in the United States could encourage a rebound in prices
by refocusing attention on tight supply of the crops.
“The U.S. harvest season is coming to an end and we could see corn and soybean prices rally next week,” said Serene Lim, a commodities analyst at Standard Chartered Bank in Singapore.
