Ukraine Turmoil May Harm Grain Planting as No Asia Impact

Planting of cereal crops in Ukraine, the world’s fourth-largest corn exporter, may be disrupted as tensions rise in the Black Sea region of Crimea, the nation’s grain association said.

Instability will force prices higher while farmers of wheat, barely and corn may be drawn away from their fields as the government mobilizes its army reserves, Vladimir Klimenko, the president of the Ukrainian Grain Association said at a conference in Hong Kong today.

Gains in everything from gold to oil drove commodities to the highest since September yesterday as Ukraine’s turmoil boosted the appeal of haven assets and fueled concern that energy and agricultural supplies will be disrupted. Ukraine put its military on high alert after Russia seized control of Crimea sparking one of the most serious standoffs between the West since the end of the Cold War.

“Because Ukraine has claimed mobilization of the population, they have to defend their country,” Klimenko said. “Instead of doing their normal jobs, people have to see what sort of role they’re going to play in the crisis.”

Corn prices in the country are rising as farmers slow sales, holding grain as a hedge against the nation’s depreciating currency, the U.S. Grains Council said last week. While exports from Odessa and other Black Sea ports are continuing and vessels are being loaded, price increases may slow down future sales, it said.

Spring Planting

The three-week spring planting season in Crimea has just started, where about 1.5 million metric tons of wheat was exported last year, Klimenko said.

Ukraine is set to be sixth-biggest wheat supplier this year, according to the International Grains Council. Wheat climbed the most since 2012 yesterday and corn rallied to the highest price since September as tensions escalated.

Wheat traded fell 1.1 percent to $6.2475 a bushel on Chicago Board of Trade at 3:15 p.m. Beijing time. Corn futures lost 0.3 percent to $4.69 a bushel.

Four of Japan’s biggest trading companies -- Mitsui & Co., Itochu Corp., Marubeni Corp. and Sojitz Corp. -- said their Ukrainian offices and operations are so far unaffected by the unrest, spokesmen said by phone in Tokyo today. They all have resident officers in Kiev.

The Korea Feed Association has no shipments scheduled for delivery from Ukraine at the moment, said Kim Chi Young, director at the Seoul-based group. If things get worse, that may limit choices for traders to supply grains to buyers, Kim said.

China Loan

The increased tensions also raise concern that Ukraine may have difficulty fulfilling a loan it signed with China in 2012, which was to be repaid in grain. State Food & Grain Corp. of Ukraine received $1.5 billion of initial funds, the company said in a statement on its website Feb. 26.

In the marketing year through June 30, Ukraine is to deliver 4 million tons of grain to its Chinese partner, China National Complete Engineering Corp., the Ukrainian company said in a statement. As of Feb. 25, 2.6 million tons had been shipped, the company said.

China National Complete Engineering’s media department in Beijing declined to comment when reached by phone.

Ukraine is fulfilling the loan obligations, Alexei Kuzmenkov, deputy director of department on economic development of agricultural market of Ministry of Agrarian Policy and Food of Ukraine said at the Hong Kong grain conference today.

China’s customs data show last month it received 570 tons of corn from Ukraine and 108,866 tons last year. Wheat imports from Ukraine were 14,123 tons last year and 3,956 tons in January.

— With assistance by William Bi, and Alex Davis

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