Russia And Ukraine To Regain Share Of Wheat Trade

KIEV, Ukraine -- Russia and Ukraine may, thanks to Europe's weak harvest prospects, reclaim their historic share of wheat shipments to the big importers, despite a tepid reaction so far to their relaxation of export curbs.

Ukrainian wheat field.

The two biggest Black Sea wheat exporters have failed to score any premier wheat sales since Ukraine replaced quotas with levies on grain shipments, and Russia announced the ditching of export levels this month.

Signally, Egypt, in its first wheat tender since February, this week barred Russian wheat from the tender.

Egypt, the world's biggest wheat importer, was left with unfulfilled orders after Russia in August imposed its grain export ban following a drought devastated harvest.

However, with a dry weather taking a toll on Europe's wheat harvest, depressing the region's export potential, Russia and Ukraine appear to have a strong hand in regaining custom, consultancy Agritel said.

Black Sea vs EU

"Ukrainian and Russian wheat quality is similar to European wheat, especially in terms of protein content," said Agritel which, while based in Paris, has a Kiev-based affiliate company.

"It is hence reasonable to consider that Ukraine and Russia will compensate easily the production losses expected in Europe, and might reclaim their market shares on the traditional markets of North Africa and the Middle East."

Rival consultancy Strategie Grains on Thursday cut its estimate for European Union soft wheat exports in 2011-12 by 4m tonnes to 12.9m tonnes thanks to weak harvest prospects, and implying a slide of 6m tonnes in shipments year on year.

The US Department of Agriculture, whose data set global benchmarks, last week forecast the EU's total exports of wheat, including the durum variety used to make pasta, falling 7m tonnes to 15m tonnes.

'Additional rainfall still needed'

Agritel's comments came as it forecast better crops for both Russia and Ukraine this year, with prospects improved by rains in the last week, which had eased concerns stoked by a dry May.

Russia's wheat harvest will rebound 29% from last year's drought-affected levels to 53.4m tonnes, although these estimates assume further rainfall is needed in the Volga valley and in Lipetsk and Voronezh, Agritel said.

Ukraine's harvest will increase by 1.3% to 18.7m tonnes, although again "additional rainfall is still needed to confirm such an improvement".

According to weather service, while southern Ukraine is set for hot weather in the six-to-10 day outlook, eastern areas and central and northern Russian, besides northern Europe, look set for "above-normal" rainfall,

Rapeseed reversal

However, Agritel flagged caution over expectations that Ukraine might plug the gap in EU rapeseed supplies left by a weak harvest, with 20% of Black Sea country's own crop hit by high levels of winterkill.

"Ukraine will probably lose market share on the international rapeseed market, mostly due to winterkill damage," Agritel said, pegging the country's harvest falling 10.2% to 1.3m tonnes and exports falling some 14% to 1.2m tonnes.

Source: Agrimoney