Traders said Friday that Ukraine’s agriculture ministry would ban exports of wheat from Nov. 15 after bad weather hit the harvest, pushing up global wheat futures prices even though traders had expected the move.
The ministry, however, is sticking to its earlier formula of allowing traders to export up to a total of five million tonnes of wheat in the current season, the trading sources said.
It was unclear whether the Nov. 15 cutoff point would apply to the signing of export contracts or would mean an immediate halt to physical shipments of wheat.
The wheat harvest has been down by a third this year because of bad weather, and grain traders, suspecting an imminent curb on exports, have been rushing to speed up shipments abroad.
"This comes as no surprise. The ban was inevitable. Everybody knew and everybody has understood," said one major foreign trader.
Ministry officials could not be reached for comment.
The ministry later said in a statement that the high pace of wheat exports would exhaust stocks of Ukrainian wheat available for shipping abroad by Nov. 15-20, and it urged traders to be cautious in concluding new contracts.
Such a timeline appeared to put at risk a wheat purchase by Egypt’s GASC, the main state wheat buyer in Egypt, which is the world’s top importer of the grain. The group bought 55,000 tonnes of Ukrainian origin wheat in mid-September as part of a larger tender purchase for shipment Nov. 21-30.
"There has not yet been any official notification by the Ukrainian government to issue an export ban, and such talk is being said by traders seeking to increase prices," said Nomani Nomani, vice-chairman of GASC.
Ukraine’s agriculture ministry said traders had doubled monthly wheat exports this season compared with last year’s level to about 1.3 million tonnes per month.
It said traders had already signed contracts to export a total of 5.4 million tonnes — more than the agreed five million tonnes volumes.
Traders "need to carefully approach continuing concluding contracts," the ministry said.
"OK, it’s done"
According to its data, Ukraine exported a total of 7.1 million tonnes of grain as of Oct. 18, including 3.57 million tonnes of wheat, 1.44 million tonnes of barley and 2.01 million tonnes of maize.
Farm Minister Mykola Prysyazhnyuk has said that Ukraine would consider imposing limits if the high level of exports threatened to push up the price of bread at home.
The move drove up U.S. and European wheat futures by more than one per cent.
"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 Ukraine, the market has been anticipating this," a European trader said.
"Last week we had someone from the ministry going up to five million tonnes. I still think it’s the five million tonnes number, after which they will say ‘OK, it’s done,’" he added.
Ukraine, which consumes 12 million tonnes of wheat, harvested 15.5 million tonnes in clean weight this year.
According to traders, it has exported about 3.5 million tonnes of wheat so far this season, and the former Soviet republic has enough port capacity to export an additional 1.5 million tonnes.
— Pavel Polityuk writes for Reuters from Kiev. Additional reporting for Reuters by Sarah McFarlane in London and Yasmine Saleh in Cairo.