USGC: U.S. Exports Face Increased Competition from Ukraine

November 11, 2011 04:41 AM

U.S. Grain Council (USGC) regional director Cary Sifferath says due to a record corn crop and a plentiful supply of quality wheat in Ukraine, U.S. exports likely face increased competition from the country.

Sifferath estimates Ukraine will have 10 million metric tons (MMT) (394 million bu.) to as much as 12 MMT (473 million bu.) of corn and 7 MMT (257 million bu.) of feed wheat available for export.

Ukrainian farmers have increased their inputs to boost yields and capital spending on port facilities and export capacity is also increasing as multinational exporters invest in the region. But Sifferath warns that rail and export facilities could still prove a bottleneck for moving such grain volumes.

"It wasn’t that long ago that the multinational grain companies were wondering if Ukraine was a safe place to invest in facilities, since the government can restrict exports, as it did in 2010," he explained.

In October, Ukrainian President Viktor Yanukovich cancelled export duties for wheat and corn that had been imposed in July, and Ukrainian officials have talked of exporting 27 MMT of grain in 2011-12. Much of Ukraine’s corn and feed wheat is likely to go to the Mediterranean region, to Israel, Syria, as well as the North African and E.U markets. Sifferath suggested, "Israel has been a big feed wheat user in the past and is likely to be a big buyer because of low transportation costs from the Black Sea. "Egypt, Algeria and Morocco are restricted from importing wheat for feed use, and sales to the EU’s Mediterranean nations will depend on pricing."

"We know the Japanese and Taiwanese have purchased some Ukrainian corn," Sifferath said, "and Ukrainian feed wheat may have traded into Southeast Asia."  He noted that feed wheat could also go to South Korea and even China, if the Chinese choose to buy wheat instead of corn to build their grain reserves.

There has also been speculation about yellow corn sales to South Africa, says USGC.


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