Ukraine Grain Loading Seen Steady as Wheat Jumps Most Since 2012

Loading of Ukrainian grain exports may remain unaffected by a threat of military conflict with Russia, even as concern about supply disruptions lifts prices.

“The ports are still functioning,” said Olivier Bouillet, manager of the Kiev office of Paris-based farm adviser Agritel SA. “For the time being loadings continue, now we have to watch current developments.”

Ukraine said Russian servicemen attacked Ukrainian army units in Crimea, southeast of the country’s main grain-export ports. Russia has built up its military presence on the peninsula, with President Vladimir Putin saying Russian speakers in Ukraine’s east and south need protection.

Grain prices in Ukraine were stable this morning after rising last week, UkrAgroConsult wrote in a daily report. Wheat prices jumped the most in 17 months in Chicago. Ukraine is forecast to be the world’s third-largest corn shipper and sixth-biggest wheat exporter in the 2013-14 season through June, based on International Grains Council estimates.

“I haven’t heard any talk of interruptions to wheat exports,” said Arnaud Saulais, a broker at Starsupply Commodity Brokers in Nyon, Switzerland. “Markets are reacting positively and violently to the threats weighing on Ukraine.”

The country still has an estimated 4 million metric tons of corn and 2.5 million tons of wheat to ship as part of its 2013-14 export campaign, according to Bouillet at Agritel.

Ukrainian ports loaded 500,000 tons of corn for export last week as well as 55,000 tons of wheat, Bouillet said. The prior week 600,000 tons of corn was loaded, he said.

Reserves Mobilized

Ukraine mobilized its army reserves yesterday after Russia seized control of Crimea, a region on the Black Sea. Ukraine’s biggest grain export port of Odessa is about 180 kilometers (112 miles) northeast of the Crimea region, while the grain-shipping ports of Yuzhniy and Nikolaev are more than 150 kilometers away.

Ship crews would be prudent to stay onboard during port calls to facilities in the Nikolaev region, insurer Skuld wrote in an online notice today. There’s no indication that ports such as Odessa and Yuzhny are disrupted, the insurer said.

Corn prices in Ukraine were rising as farmers slowed sales, holding grain as a hedge against a depreciating currency, the U.S. Grains Council said last week. Domestic corn prices rose 300 hryvna ($31) a ton last week, trading at 1,700 to 1,850 hryvna a ton ex works, UkrAgroConsult said.

Ukraine was the fourth-largest corn exporter in 2012-2013, behind Brazil, the U.S. and Argentina, IGC data show. The country may leapfrog Argentina this year, shipping 18.3 million tons through June from 13.6 million tons a year earlier, according to the IGC. That compares with forecasts for 35.5 million tons from the U.S. and 24 million tons from Brazil.

Wheat Exports

The country will probably export 9.5 million tons of wheat this season from 7.1 million tons in 2012-2013, making it the sixth-biggest supplier, according to the IGC.

Corn for May delivery rose 3.2 percent to $4.785 a bushel in Chicago, and reached $4.8275, the highest for a most active contract since Sept. 3. Wheat for delivery the same month climbed 5.2 percent to $6.335 a bushel, and rose as much as 5.9 percent, the biggest intraday advance for a most-active contract since September 2012. Milling wheat for May delivery traded on NYSE Liffe in Paris added 3.4 percent to 203.25 euros ($279.75) a ton.

Ukraine’s share of global corn exports is predicted to climb to 17 percent in 2013-14 from 14 percent in 2012-13, according to the IGC.

Financial Crisis

“Ukraine is a large exporter country in wheat and corn,” Saulais said. “Taking into account Ukraine’s weight in the global corn trade, you can expect repercussions on the wheat-corn spread in Europe.”

The tension between Ukraine and Russia doesn’t affect the outlook for final 2013-14 grain exports for now, according to Bouillet. “Ukrainian exports at this pace will be finished in two months,” he said.

Ukraine’s financial crisis may affect production of spring crops, with farmers having more trouble paying for fertilizer, also after the country’s currency fell against the dollar, according to Bouillet.

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