Ukraine’s president signs off on grain export duties

Ukrainian President Viktor Yanukovych signed into force a law that introduces 9-14% export duties for cereals yesterday. According to the law, duties for cereals will be: maximum of 9% of the value or EUR 17 per mt for wheat, maximum of 14% or EUR 23 per mt for barley and maximum of 12% or EUR 20 per mt for corn. The law is effective from June 1, replacing previous quota mechanism, and will remain in effect until January 1, 2012. Yegor Samusenko: We think the law is already priced in by the market, as it was proposed in April and approved by parliament a week ago.  We stick to believing that this is a short term initiative with the key aim of shifting focus on increasing the processing of cereals in Ukraine rather than exporting raw commodities. We believe the government is drawing on its implementation of oilseeds duties in 2001, which spurred rapid development of the sunflower oilseed crushing industry – as a result, sunflowers are mostly exported in oil form rather than oilseeds, creating a higher domestic value chain. As soon as the government sees this policy is unlikely to succeed for wheat, corn and barley, we expect the abolition of export duties.