PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 10:08 UK, 25th Oct 2012, by Agrimoney.com
EU condemns Ukraine 'ban' on wheat exports

The European Commission risked further straining relations with Ukraine by condemning the Black Sea country for its apparent wheat export ban, warning that the curbs, which stand to leave top importer Egypt in the lurch, will add "unnecessary tension" to tight crop markets.

Dacian Ciolos, European Union agriculture commissioner, said that he was "deeply disappointed" at the announcement by Ukraine farm minister, Mykola Prysyazhnyuk, on Wednesday that the country is to ban wheat exports from November 15.

"It will add unnecessary tension to international agricultural markets," Mr Ciolos said, with supplies tightened by a disappointing US corn harvest, poor soybean crops in North and South America, and wheat setbacks in countries such as Australia and the UK as well as Ukraine.

Ukraine's, apparent, export restrictions follow a drop of some 30% in wheat production, following prolonged dryness and elevated levels of frost damage last winter.

"Those that will suffer most will be the world's poorest," Mr Ciolos said.

Trade curbs have a long history of elevating prices by restricting supplies and sparking market panic, as occurred after Ukraine's neighbour, Russia, banned grain exports amid a drought two years ago.

'Clear as mud'

Mr Ciolos's comments - which are far stronger than those aimed at Russia after its ban - come amid tensions between Brussels and Kiev over Ukrainian democracy, seen to have been eroded by the imprisonment of opposition leader Yulia Tymoshenko, changes to electoral rules and curbs on media freedom.

However, doubts still remain over the export ban after the office of Ukraine's prime minister, Mykola Azarov, denied a decision has yet been taken.

"The situation is clear as mud and communication within the Ukrainian cabinet could do with some improvement," Luke Mathews, agricultural commodities analyst at Commonwealth Bank of Australia, said.

Consultancy Agritel said that "confusion is in the news" following the government's "ambiguous statement".

Sensitivities over a ban which stands to divide the agricultural community are being heightened by elections on Sunday, at which President Viktor Yanukovych's Party of the Regions is bidding to retain control of the party, against opposition parties united under Ms Tymoshenko.

Egypt to lose out?

The implementation of a ban would likely mean many traders relying on "force majeure" clauses to renege on wheat export contracts, as occurred in Russia after Moscow's 2010 curbs, Agritel added.

Egypt - the world's top wheat importer, which on Wednesday urged Ukraine to consider its "credibility" as an exporter - faces losing two 55,000-tonne wheat deliveries booked for shipment after the November 15 deadline.

Nonetheless, Ukraine may by the deadline have shipped 5.4m tonnes of wheat, ahead of the target revised up to 5m tonnes earlier this month, Agritel said.

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