Ukraine said on Wednesday it had put off introducing curbs on grain exports because the world market had settled after Russia's export ban and the Ukrainian home market was no longer threatened by demand from abroad.
But Ukrainian customs continued to enforce de facto export restrictions by blocking grain shipments from sea ports on the grounds that cargoes had been wrongly labelled.
"Everything is frozen. There are no grain shipments to ports because of the restrictions imposed by regional authorities. There is no movement going on in the ports," one foreign trader told Reuters.
One of the world’s top wheat and barley exporters, Ukraine earlier this month proposed limiting exports of the two commodities to 2.5 million tonnes between September and December following a drought in the region.
The move followed a ban on grain exports by last year’s world number three grains exporter Russia, which led to soaring grain prices and panic buying on world markets.
"The question (of quotas) will not be discussed today," Farm Minister Mykola Prysyazhnyuk said on Wednesday. Asked by journalists whether the government would introduce quotas for the 2010/11 season as earlier proposed, he said: "Not yet".
The Russian ban raised fears in Ukraine that foreign hunger for grain would draw down Ukrainian stocks and lead to a bread shortage in the country of 46 million where the economy is just beginning to recover from the global downturn.
Deputy Prime Minister Viktor Slauta said the ex-Soviet republic, which consumes 26 million tonnes of grain per year and plans to harvest up to 41 million tonnes of grain in 2010, had enough grain to avoid imposing curbs on exports.
European and U.S. grain suppliers had now filled the gap on the world market caused by the Russian export ban and sky-high prices had come down, Slauta said.
"The United States and France have become players on the Black Sea market and even Germany has become an exporter. They covered the gap. Speculative prices have come down and are now close to market prices," he told reporters.
He said wheat prices in Europe had fallen to $260 per tonne from $350-$360 in mid-July.
"This whirlpool has hit not only countries which will have no harvest…but also Ukraine, which will harvest 40-41 million tonnes of grain," Slauta said. But he said a decrease in harvest would mean a smaller grain export in the 2010/11 season.
Ukraine sold 21.5 million tonnes of various grains in 2009/10 season from a total harvest of 46 million tonnes. Traders and analysts say exports could be down to 15 million tonnes in 2010/11.
The Agriculture Ministry in Russia said its grain crop had fallen by nearly a third so far, delaying winter grain sowing.
Meanwhile Germany’s 2010 grain crop could fall to around 43.9 million tonnes from 49.7 million tonnes in 2009, the German farmers’ association DBV said on Wednesday, adding to a downbeat outlook for the EU’s second biggest producer.
CUSTOMS BOTTLENECK
Ukrainian customs officials, however, continued to find reasons to block grain shipments all the same. Grain movements out of Ukrainian ports in the Black Sea and Azov Sea have been halted by customs officials saying, for instance, that milling wheat was being illegally exported under the guise of fodder.
"The government does not need quotas because customs have already limited all exports," the foreign trader told Reuters.
Another trader said customs were allowing shipments of small volumes of grain out of smaller ports but only after time-consuming checks taking up to a week to complete.
"It is like a lottery – whether shipments will be allowed or not. These exports are small, just drops, but we have to wait and wait", he said.
Traders said curbs had already cut Ukrainian grain exports and the country could sell about 1.2-1.5 million tonnes of grain in the two first months of the 2010/11 season compared to about 4.0 million in July-August 2009/10.
