By Javier Blas in London and Mark Rachkevych in Kiev
Published: October 7 2010 19:24 | Last updated: October 7 2010 19:24
Wheat and corn prices rose after Ukraine said it would impose export restrictions on agricultural commodities until the end of the year after a drought this summer devastated the country’s cereal crop.
Kiev said it would cap overseas sales of wheat and barley at 500,000 tonnes each and corn at 2m tonnes.
The cap announcement by first deputy prime minister Andriy Klyuev needs to be confirmed at a cabinet meeting next week.
“We introduced them [the quotas] on Monday,” he told reporters in Kiev.
Analysts said Ukraine had exported 4.2m-4.5m tonnes of winter grains, mostly wheat and barley, so the limits would leave little room for further sales.
Traders said the move to impose official export limits followed weeks of de facto limits in overseas sales using customs and administrative measures.
Andriy Yarmak, a Kiev-based agribusiness consultant, said the move would “adversely affect Ukraine’s global position on the grain market”, being another of Kiev’s frequent interventions in the market to ban or limit grain exports.
Dmytro Ushenko, agriculture analyst at BG Capital in Kiev, said the move came after “an acceleration in the pace of grain exports and the need to replenish state food grain reserves”.
He added that the export limits were also aimed “at bringing prices in check before the upcoming municipal elections to be held at the end of October”.
In Paris, Liffe December milling wheat rose 1.4 per cent to €206.75 a tonne.
Wheat prices are still below the two-year high hit last month at €238 a tonne after Russia announced an extension of its export ban in grains until mid-2011.
In Chicago, CBOT December corn prices rose 2.5 per cent to $5 a bushel.
Corn hit a two-year high of $5.28½ bushels in late September on concerns about a lower than expected crop in the US, the largest exporter of the cereal.
Barley prices in Europe also rose, with the cost of the grain in the physical market in northern France quoted at €185 a tonne.
Prices are below the highs reached this summer, when barley in Europe traded at an unusual premium to milling wheat.
Elsewhere in commodities markets, crude oil prices fell sharply amid profit-taking after three days of large gains and as the US dollar strengthened against the euro and other currencies.
In late afternoon trading, Nymex November West Texas Intermediate dropped $1.56 a barrel to $81.67 a barrel while ICE November Brent fell $1.86 to $83.23.
Crude oil prices remain within the $70-$85 a barrel range in place for most of the last year.
Traders will watch next week’s Opec meeting in Vienna for signals about the direction of the market.
The oil cartel is expected to maintain its production unchanged.
US natural gas prices fell nearly 5 per cent to $3.686 per million British thermal units on ample supplies.
Base metals prices fell, but prices remained high ahead of London Metal Exchange Week, the annual gathering of the industry in London.
Sugar futures headed for the biggest gain since May on concerns supplies in India, the world’s second-biggest producer, would be disrupted. Raw sugar for March delivery rose 1.38 cents to 24.92 cents a pound.
Copyright The Financial Times Limited 2010. You may share using our article tools. Please don't cut articles from FT.com and redistribute by email or post to the web.