Azarov: Ukraine will keep grain export duties

The Cabinet of Ministers removed from its agenda the abolition of grain export duties, according newspaper Zerkalo Nedeli. The paper said Prime Minister Mykola Azarov said the state budget would lose UAH 3 bln in income if the duties are cancelled, which it cannot afford. The export duties were introduced as of June 1, 2011 as the 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. Yegor Samusenko: Rumors of possible duties abolition have forced farmers to slow harvest sales to traders and traders to keep the grain they bought in stocks instead of exporting right away. This could result in relatively low sales figures for the 1Q11/12 period for Kernel (WSE: KER PW, N/R) and in 3Q11 for most of domestic farmers, as revenues will shift to later periods. We believe the agriculture community will not succeed in lobbying for duties abolition. Moreover, we expect the government to prolong duties until the end of the marketing year (i.e. until January 1, 2012) and maybe even longer if soft commodities prices do not deteriorate. We keep our view that most of the duties will be passed on to the farmers by the stronger consolidated grain traders.