Grain Exports Pouring Out Of Desperate Ukraine

Despite an anticipated fall in grain production of around 20% this season, cash-starved Ukraine continues to export grain ahead of even last season's record pace.

Up to Oct 13th over 7.5 MMT of grain (just over 4 MMT of it wheat) had been exported in the current marketing year which began on July 1st, according to Ukrainian Agriculture Minister Yuriy Melnyk. That's 240,000 MT more than at the same time a year ago.

This season's grain harvest will total 42.9 MMT, said Melnyk, down sharply from 53.5 MMT a year ago. Exports in the current marketing year will total 16.69 MMT he said, a third lower than the 25.2 MMT exported last season.

That means that just fifteen weeks into the marketing year, Ukraine have already exported 45% of their target for the entire year. That's some going that is.

If ever there was a time to sit back and let the cheap distressed sellers offload their wheat at whatever price they can get for it, then this must surely be it. So what's going on?

The country with easily the lowest credit rating of all the major global wheat exporters needs cash desperately.

The IMF are in town, and Ukraine has violated the terms of it's deal agreed back in November 2008 to stabilise the Hryvnia and increase subsidised gas tariffs by September 1st. With an election looming the government have failed to deliver on either promise, and the IMF may now decide to withhold the final $3.8 billion tranche of the $16.4 billion handout agreed last winter.

Against a backdrop like that, it's not remotely surprising that grain is pouring out of the country, with price an almost secondary issue. Let them get on with it I say, why bother trying to compete with that?