Ukrainian Lawmakers Vote to Scrap Corn, Wheat Export Duties

Ukrainian legislators voted to scrap export duties for corn and wheat, while maintaining a 14 percent levy on barley shipments. Corn for December delivery dropped as much as 1.5 percent on the Chicago Board of Trade.

Grain exports may amount to 23.4 million metric tons in the marketing year that started July 1, a bill published on the parliamentary website today showed, including 11.1 million tons of wheat and 9.1 million tons of corn. Ukraine will become the third-largest corn exporter this year after the U.S. and Argentina, U.S. Department of Agriculture data show.

The grain harvest this year may match 2008's record of 53 million tons as favorable weather helps to improve yields, according to the Agriculture Ministry. Stockpiles of wheat may surge 31 percent to 4.4 million tons and corn inventories may jump 61 percent to 1.61 million tons, USDA data show. Ending the duties reduced the risk for Ukraine's government of losing potential export markets.

"Given they have adequate domestic supply, this is not entirely unexpected," said Kieran Walsh, a broker at GFI Securities in London. "This could be a reaction to the upward revisions to yields in the U.S. crop and subsequent potential erosion of market share."

Grain Prices

The announcement may cause grain prices to fall, William Adams, a portfolio manager for Resilience AG in Zurich, said by e-mail. December-delivery wheat declined as much as 1.6 percent in Chicago October 7, 2011 before erasing the retreat.

Corn has dropped 4.1 percent this year after a 23 percent plunge in September, the biggest monthly decline since at least 1959. The USDA said last week U.S. stockpiles totaled 1.13 billion bushels as of Sept. 1, 20 percent above analysts' expectations.

Wheat also slid 23 percent in September on speculation Europe's debt crisis would hurt demand and as Egypt, the top global buyer of the grain, shunned U.S. supplies and instead bought Russian inventories. Ukrainian exporters will now be able to ship grain duty-free, potentially weighing on prices.

The bill must be signed by President Viktor Yanukovych before taking effect. Lawmakers also voted to impose a 3 percent tax on exports of soybeans, rapeseed and sunflower oil, according to the website.

Ukraine imposed its first taxes on grain exports as of July 1, replacing quotas on shipments put in place last year to ensure domestic supply after dry weather cut wheat output by 19 percent. Russia, which barred grain exports last year amid its worst drought in a half-century, allowed the ban to expire July 1 as scheduled.

The USDA last month forecast Ukrainian corn exports at 10 million tons in the current marketing year, up from 5.5 million in the prior 12 months, and wheat shipments at 9 million tons, more than double deliveries in 2010-11.