Tax rules curb Ukrainian grain exports

The March wheat contract on the Matif closed unchanged yesterday at €230,75 per tonne. On the CBoT, prices closed in the red across the board. Wheat was the biggest loser, closing 1,2% lower at $5.36¼ per bushel. Corn lost 0,9% to $4.54 per bushel. Soybeans saw their losses limited to 0,5%, bringing the closing price to $9.87½ per bushel. Today is a shortened trading day on the CBoT due to a day of national mourning for the funeral of former President Jimmy Carter.

The measures that Ukraine has taken to suppress tax evasion with grain exports are reflected in the export figures for December from the Ukrainian Ministry of Agriculture. In total, 3,6 million tons of grain were exported by Ukraine. That is 13% less than in November. The largest part of the grain export concerns corn with 2,5 million tons. In addition, 789.000 tons of wheat were exported. In total, Ukraine exported 22,4 million tons this season up to and including December, compared to 19,4 million tons in the same period last season.

According to some analysts, the minimum export prices that were introduced on 1 December play a major role in the decline in exports. This measure was introduced to prevent exporters from artificially keeping the export price low in order to pay as little sales tax as possible. Other analysts point out that farmers are in no hurry to sell corn because the price on the Ukrainian market is rising. Relatively small stocks in Ukraine are also mentioned, but this mainly concerns oilseeds and vegetable oil. The export of oilseeds in December was 580.600 tonnes, 28% less than in November and the export of vegetable oil fell by 22% to 421.900 tonnes.

European grain exports continue to falter
The EU has not really been able to benefit from Ukraine’s lower exports. The EU has exported 5 million tonnes of wheat this season up to and including 11,2 January, according to European Commission statistics. Last year, the figure was 16,9 million tonnes. Nigeria, Morocco and the UK are the largest buyers of wheat, with 1,8 million, 1,1 million and 0,9 million tonnes respectively. Barley exports are 2,2% behind last season, at 32 million tonnes. The EU has imported 5% more maize so far this season, with the figure now standing at 10,1 million tonnes.

Meanwhile, the trade is also cautiously anticipating the Wasde report that will be published on Friday evening Dutch time. Usually, the January edition of the report is cautiously bullish for the grain market. That is also what the trade is now assuming, as shown by the survey conducted by Reuters.

Drought in Argentina has supported soybeans and corn in recent days. Rain seems to be on the way for drought-stricken Argentine farmers. The Buenos Aires grain exchange cites local weather reports predicting rain for the period from January 16 to 22. The American weather model also predicts precipitation for that period, but is less certain than the Argentine meteorologists. Nevertheless, the weather reports for South America are causing some price pressure on the Chicago exchange.