Ukrainian wheat won its first order in three months from
Egypt's Gasc grain authority, the world's biggest buyer, in what some traders
took a sign of increasing confidence in the former Soviet Union country's
Gasc, at its first wheat tender in three weeks, purchased 230,000
tonnes of the grain, mainly from Romania, the authority's main source in
2013-14, the origin of more than 1.6m tonnes so far.
But the deal also included 55,000 tonnes from Russia and
55,000 tonnes from Ukraine which, while a major recipient of Gasc orders earlier
in the season, had not even seen wheat tendered to the authority since January,
as its political crisis heated up.
The Ukrainian wheat was actually the cheapest offered to
Gasc this time, at $286.85 a tonne excluding freight, cheaper than Russian
supplies, and even below US grain, which has proved itself competitive for much
of the season if the higher shipping costs across the Atlantic are factored
Cargill offered Gasc, the grain authority for the top
wheat-importing country, US soft red winter wheat at $290.90 a tonne excluding
The cheapest French wheat was offered at $306.50 a tonne on
the same basis.
Need for seed
The Ukrainian victory was viewed by some traders as a sign
of increasing confidence in the country's grain supplies, despite the country's
political unrest and the annexation of Crimea by Russia.
One European trader told Agrimoney.com: "Gasc much think
that there won't be any problems, at least for the next few weeks," with the
shipment due May 1-10.
The shipment also looked a sign of grain being available.
There have been concerns of the political crisis, and the depreciation of the
hryvnia, encouraging farmers to hoard grain as a dollar-denominated hedge.
"There is only so far you can go with this strategy. Farmers
do need money at this time of year to pay for seed and fertilizers," and with
the Ukraine crisis squeezing borrowing costs and availability.
Indeed, there is some talk of a hangover on prices from the crisis,
as consumers which bought extra supplies in case of disruption to supplies from
the former Soviet Union sell back to the market, or reduce forward coverage.
"There is significant thought within the industry that
the Black Sea crisis caused some importers to double book as they were
concerned about getting their Black Sea supplies," Darrell Holaday at US
broker Country Futures said.
"At this point there has been no impact on grain
movement in that area.
"That could change, but if it does not the market may have
to deal with some corn and wheat cancellations down the road."
'Worsen the crisis'
In fact, tensions around Ukraine are still running at
Russia's president, Vladimir Putin, warned on Thursday that gas
supplies to Ukraine could be cut if Kiev does not pay off its debts.
Ukraine's interim prime minister, Arseniy Yatsenyuk, has
offered to devolve powers to eastern areas of the country, where pro-Russian
separatists have occupied a government building.
Agritel, the Paris-based crop consultancy with an office in
Ukraine, highlighted that on Thursday, Ukraine's hryvnia fell to 12 to $1, "50
% higher than three months ago.
"This devaluation could worsen the crisis in the agriculture
However, agribusinesses linked to Ukraine have also, mainly,
shrugged off the crisis, with US-based irrigator maker Lindsay Corporation being
an exception, cautioning last month that the turmoil was "likely to pressure" demand
for its equipment.
On Friday, Ukrainian egg producer AvangardCo, while acknowledging
that the country's political situation "has worsened since the beginning of 2014",
said that all its facilities were operating in the "usual mode".
"As far as the company's assets in Crimea are concerned, AvangardCo
plans to limit their use until the situation in the region has stabilised," the
group said, unveiling a 4.3% rise in earnings for 2013, to $238.1m on revenues
up 5.1% at $661.2m.
AvangardCo depositary receipts, a proxy for shares, closed
up 1.1% in London at $9.60, but remain down 18.3% so far this year.