Where is the World cheapest grain ? USa , Russia or ... PDF Print E-mail
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Sunday, 03 February 2013 12:30

Ukraine , the world’s Third-biggest wheat exporter  is offering the largest discount on the grain in at least four years and targeting buyers in Southeast Asia and Middle East.

 

Ukrainian wheat costs at least $40 a metric ton less than North American, French or Australian supplies, according to the Moscow-based Institute for Agricultural Market Studies researcher, also known as IKAR. That makes shipping to countries such as Malaysia viable after freight rates fell 44 percent in the past 12 months.

Ukrainian grain exports in December  probably rose to 2 million tons, the highest monthly shipments on record, according to IKAR and Moscow-based agriculture researcher SovEcon. Exports to long-haul destinations such as Southeast Asia and southern Africa may reach as much as 1 million tons in the 12 months that end June 30, compared with the previous record of 650,000 tons in the 2011-2012 season, according to IKAR.

“Ukraine is offering such a big discount that it allows the grain to travel these crazy distances, Buying  ukrainian wheat may be cheaper than Australian.”

Ukraine , the world’s Third-largest wheat exporter behind the U.S. in the 12 months ended June 30, 2012, fell to eighth in the following period as exports slumped 79 percent to 3.9 million tons, data from the International Grains Council show.

Vietnam, Malaysia

The outlook for Ukrainian wheat production in the 12 months through June next year was raised by 2 million tons to 56 million tons, the IGC said July 28, increasing its June 30 forecast. Ukraine is expected to ship 10 million tons of the grain in the 12 months that end  December 30, the IGC said.

Ukraine ship wheat to Vietnam and Malaysia, also sold wheat to Kenya and Mozambique.

“In former years those markets were served by cheaper origins, might it be the U.S., might it beArgentina , might it be Australia.

The distance between Ukraine's southern port of  Odessa, the main grain export hub, and Ho Chi Minh City in Vietnam is 6,900 nautical miles (7,940 miles), according to e- ships.net website.

Egyptian Purchases

Egypt, the world’s biggest importer, bought 720,000 tons of   ukrainian grain since the ban was lifted, while Jordan and Tunisia also made purchases, according to tender results. Egypt had dropped  Ukraine  from its list of approved sources after the eastern European country imposed its ban, according to the country’s state wheat buyer.

The northern Africa nation agreed to buy 120,000 tons of Russian milling wheat for $289.47 to $290.40 a ton on July 26. November-delivery milling wheat traded on NYSE Liffe in Paris was at the equivalent of $333.27 a ton at 4:10 p.m. local time today.

farmers. In the Egyptian tender “they were $35 cheaper than the nearest competitor, France .”

Discount to Narrow

The cost of hiring panamax ships, which typically carry grains as well as coal and iron ore, has slumped 44 percent in the past year to $11,995 a day, according to the Baltic Exchange inLondon . When transportation costs decline, it makes it cheaper for traders to move cargoes across longer distances.

The discount will gradually narrow as Ukraine runs out of its exportable surplus and long-haul deliveries may wane in about two months, according to  experts.

Competitors’ prices are also falling. Milling wheat fell 16 percent in Paris trading in the past two months, partly amid concern that Ukrainian exports would reduce demand for European and U.S. cargoes. Prices slid 4.1 percent in Chicago .

Ukraine Agriculture Ministry estimates total grain exports in the 2011-2012 marketing year will be 20 million tons as the harvest rebounds to as much as 90 million tons.

Ukrainian Competition

Australia, the third-biggest wheat exporter in the 2012-13 season, will ship 18.5 million tons by the end of the Australian marketing year, according to the IGC. Deliveries between October and May totaled 12.6 million tons, according to the Australian government .

“There is not a great deal of milling wheat potentially left on the east coast of Australia,” Paul Deane, an economist at Australia & New Zealand Banking Group Ltd. (ANZ), said by phone from Melbourne .

In Southeast Asia, Ukraine has competed with Russia , which offers similar quality grain, rather than Australia, said  Grain Union, which represents the country’s biggest producers and traders.

 

More Expensive

Ukrainian grain is gradually becoming more expensive for importers. Egypt paid as much as $295.25 a ton for milling wheat at  January.

Last Updated on Sunday, 07 April 2013 18:27