Ukraine Corn Exports To Boost World Supplies

KIEV, Ukraine -- Ukraine corn exports are set to double over the next year, providing some relief to global grain markets that expect a disappointing U.S. harvest.

Brazil's supremacy as the world's top corn producer is being threatened by Ukraine this year. Here, corn stalks at Agro Brasilia, an agricultural exhibition on the outskirts of Brasilia, in May.

The jump in shipments is forecast to make the eastern European nation the world's third-largest exporter of corn, surpassing Brazil for the first time in seven years.

The U.S. is the No. 1 corn exporter in terms of volume, followed by Argentina.

Ukraine is forecast to harvest a record crop after a devastating drought last year.

Farmers there planted more corn and used better quality seed to take advantage of higher prices, and then the crop benefited from favorable summer weather.

Ukraine exports could reach 12.5 million metric tons (13.8 million short tons) this season, up from 5.3 million metric tons last year, according to Ukrainian agricultural analysis agency APK-Inform.

The U.S. Department of Agriculture forecasts Ukraine will ship 10 million metric tons for the crop year that started this month, an 82% rise from last year.

The surge comes as corn prices stand at historic highs after a hot, dry summer trimmed the size of the U.S. crop.

The USDA in a report earlier this week forecast U.S. farmers would receive record prices for the corn that is starting to come out of the field.

"If you're going to have surplus production for corn, this is the year to do it," said Shawn McCambridge, senior grains analyst for Jefferies Bache, a brokerage in Chicago.

Still, Ukraine's exports sharply lag the U.S. and Argentina, which are projected to ship 41.9 million metric tons and 19.5 million metric tons, respectively, according to the USDA.

Global supplies are forecast to hit precariously low levels for a second straight year as demand by ethanol makers, livestock producers and food processors continues to grow.

The United Nations Food and Agriculture Organization said last week its food-price index slipped less than a point in August to 231 points, just below a record high set in February.

Forecasts for the U.S. crop have declined in recent months.

The harvest is still expected to be the third largest on record, but falls short of expectations in the spring when farmers planted a huge crop in response to tight supplies and high prices.

Ukraine could step in to fill some of that void, with livestock producers in countries such as Egypt, Ukraine's biggest customer, benefiting.

The surge in exports could ease price pressures as Ukraine "increases the amount of (animal) feed supplies that are available as an alternative to high-priced U.S. corn," said John Kleist, broker and analyst for ebottrading.com, an agricultural advisory and brokerage firm.

Analysts expect the increase in exports from Ukraine to be sustainable as long as high corn prices continue to encourage production.

Increased wheat exports from the Black Sea region already are helping to expand global grain supplies and limiting price gains.

Taxes imposed on grain exports by Ukraine's government could be one limiting factor for the country's export growth, said Andrey Sizov Jr., managing director of Moscow-based think tank Sovecon.

Yet, most analysts played down the impact of the recently imposed duties, saying Ukraine's prices were still expected to remain below global levels.

Svetlana Sinkovskaya, marketing manager at the Ukrainian body APK-Inform, noted the export taxes are due to be lifted at the start of next year, anyway.

Source: The Wall Street Journal

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