Ukraine grain exports to recover from slow start

Ukraine is set for bumper grain exports in 2011-12, despite the slow start to the season, Kernel Holdings said, blaming the 70% slump in volumes so far on uncertainty over a change in regime.

The silos-to-sunflowers group acknowledged that it had been hurt "in particular" by the 70% slump to 600,000 tonnes in Ukraine’s exports of wheat and barley during July and August, the first two months of the marketing year.

But the "slow" rates of grain export and origination reflected temporary uncertainty, with farmers banking on reversals to polices which have introduced less favourable grain export levy and VAT regimes.

Growers "have been reluctant to sell at prices negatively impacted by both changes," Andrey Verevskyy, the Kernel chairman, said.

Ukraine’s exports would be lifted by a "sizeable harvest" this year, which will allow grain exports of 20m tonnes overall, including 9m tonnes of wheat and "at least" 9m tonnes of corn.

The overall estimate is marginally above that of the US Department of Agriculture, which has pegged Ukraine corn exports at 8.5m tonnes, if below that of Ukraine’s farm ministry, which has forecast shipments of 25m tonnes.

‘Ukrainian exporters lose’

The comments come amid a drive by Ukraine to shake-up its tariffs regime, after the dismal start to 2010-11, which the USDA blamed on "and messy government handling of export tariffs and value added tariff (VAT) compensation".

However, the USDA acknowledged Ukraine’s "higher supplies of feed-quality wheat", following a rain hampered harvest, supplies "that are expected to be in high demand this year throughout the world".

And Ukraine is taking active steps to shake-up a tariff regime which, according to consultancy Agritel, has left the country’s exports some $30 a tonne above Russia’s.

"Therefore, Ukrainian exporters lose international markets," Agritel added, warning too that the tariff shake-up could take one-to-two months to be implemented, "as parliament must vote and the president sign".

‘Large grain export potential’

Kernel added that its own grain exports should jump by 40% to 2.5m tonnes in 2011-12, while its port terminals would handle 3.3m tonnes.

"The terminals segment should benefit strongly from the country’s large grain export potential," Mr Verevskyy said.

He also forecast a 35% jump in crushing activity, reflecting the group’s ongoing Russian takeover in sunflowers besides record crops of the oilseed, above 8m tonnes, in both Russia and Ukraine.

And Kernel’s purchase of farm operator Ukrros will double the group’s agricultural production – with additional acquisitions in the pipeline.

The group is to achieve revenues of $2.3bn in its 2012 financial year, which started last month, a figure ahead of market forecasts of $2.0bn, Mr Verevskyy added.

His net income forecast of $255m was in line with investors’ expectations.

Kernel shares closed 3.5% higher at 67.00 zloty in Warsaw.

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