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Experts say grain purchase prices will be low

May 19, 2010

Experts are forecasting low grain purchasing prices at the beginning of the new marketing year (MY, July 2010 – June 2011). This was announced earlier at a news conference in Kyiv by Rodion Rybchynskiy, the head of the APK-Inform news agency’s analytical service.

According to him, grain will be purchased at the beginning of the new season virtually at the cost of production. The expert noted that the production cost of different types of grain harvested in 2010 saw average growth of 2-31%. In particular, the prime cost of producing wheat production is on average 746 hryvnyas per tonne, barley – 595 hryvnyas per tonne, corn – 518 hryvnyas per tonne, sunflower – 1,637 hryvnyas per tonne, rapeseed – 1,791 hryvnyas per tonne, and soybean – 1,751 hryvnyas per tonne.

According to Serhiy Stoyanov, Director-General of the Ukrainian Agrarian Confederation, “the beginning of the season may be dull, and this may also result in a fall in the purchase price.” The state's debt for reimbursing value added tax to grain exporters is forcing traders to reduce grain purchase prices.

According to Volodymyr Klymenko, president of the Ukrainian Grain Association, as of 1 April 2010 the sum of the VAT reimbursement debt owed to exporters of agricultural produce was 8bn hryvnyas. At the same time, Mr Klymenko added that grain purchase prices will depend on the government’s actions with regard to paying off the VAT debt.

At the same time, market players have expressed the hope that the government will find ways of resolving this problem. Mr Klymenko said that traders are ready to work with state bonds, but in his opinion their declared five-per-cent profitability does not correspond to market indices. Market players are calling on the government to begin dialogue in order to resolve this problem.

Tags: grain