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Government abandons plans to establish grain export quotas

Government abandons plans to establish grain export quotas

30 August 2010

The Cabinet of Ministers decided against export quotas on Ukrainian grain, Viktor Slauta, Ukrainian Vice-Prime Agriculture Minister, stated on Friday. The Agricultural Ministry announced that local ports are open for exports, although the 2010/11 season export volume had declined by 46% y-o-y to nearly 2 mln mt as of Friday. According to Evgeniy Lavrov, Ukraine’s Deputy Agriculture Minister, approximately 1.3 mln mt of grain is stored in ports while 0.3 mln mt have already been loaded onto 23 vessels for export. In the meantime, the Agricultural Ministry lowered its grain harvest forecast by 3% to 40.8 mln mt, or 11% below last year’s total, which implies 15 mln mt of grain for export (-28% y-o-y). Ruslan Patlavskyy: In our view, the news is positive for domestic grain producers, including publicly-traded Sintal (FSE: SNPS GR), MCB Agricole (FSE: 4GW1 GR), Landkom (AIM: LKI LN), Mriya (FSE: MAYA GR), and Astarta (WSE: AST PW) as it will allow higher local grain prices as a result of convergence with global prices, since there is no restriction on demand from local exporters. At the same time, this is likely to result in a deteriorating outlook for domestic grain traders, in particular Kernel Group (WSE: KER PW), for the current fiscal year as the more liquid grain market will limit potential export margins.

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