Traders seen wary of new Ukraine grain deals

Kiev | Reuters — Foreign trading houses have shunned new grain export contracts due to continued tensions between Ukraine and Russia, Ukraine’s agriculture minister Ihor Shvaika said on Wednesday.

“They are still waiting and there are no new contracts,” Shvaika told Reuters.

In the wider dispute Wednesday, Russia rebuffed Western demands to withdraw forces in Ukraine’s Crimea region to their bases amid a day of high-stakes diplomacy in Paris aimed at easing tensions over Ukraine and averting any war.

Political instability and violence had caused some traders in Ukraine, the world’s third-biggest maize exporter, to hold back from agreeing new contracts, while Russian maize export prices have been rising for two weeks.

Grain shipments from Ukraine are “becoming increasingly difficult,” although ports are open and vessels are loading, the U.S. Grains Council said in a statement. Farmers are holding grain, rather than selling it to exporters, to hedge against devaluations in Ukraine’s currency, according to the group.

The U.S. Department of Agriculture last month projected Ukraine will export 18.5 million tons of corn in the 2013-14 marketing year, which ends on Aug. 31. About 15 million tons has already been shipped, leaving 3.5 million tons in projected exports between March and June, said Cary Sifferath, a regional director for the U.S. Grains Council.

“Instability is creating opportunities for additional U.S. exports to North Africa, the Middle East, and China,” Sifferath said.

Ukrainian grain lobby UAC said traders were continuing grain exports from terminals in Crimea despite tensions.

UAC said in a statement 45,000 tonnes of Ukrainian maize had been sent from terminals in Sevastopol to Italy and Spain in the last two days.

But the lobby warned it expected a decrease in shipments in the near future.

Ukraine, a leading grain seller, said this week it had exported around 25 million tonnes of grain so far this season and planned to ship an additional 8.7 million tonnes in the remaining four months of this season which runs from July to June.

— Reporting for Reuters by Pavel Polityuk in Kiev; additional reporting for Reutes by Tom Polansek in Chicago.

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