(Dow Jones) — Ukrainian farmers are holding on to grain to protect themselves against declines in the country's currency amid tensions with Russia, making exports from its Black Sea ports “increasingly difficult,” the U.S. Grains Council said Wednesday.
Strained shipments of grain from Ukraine, a major wheat and corn exporter, could lead to increased demand for U.S. crops from North Africa, the Middle East and China, according to the Washington-based trade group.
The shipment difficulties couldn't be independently confirmed. Any problems in Ukraine could benefit U.S. suppliers represented by the Grains Council, a nonprofit that develops export markets for U.S. corn, sorghum, barley and other products.
Ports have remained open during Russia's military incursion into Ukraine's Crimea region and “vessels are loading,” said Cary Sifferath, the Grains Council's regional director for the Middle East and Africa. However, shipments are becoming more difficult because “we're seeing farmers holding grain to hedge against a devaluing currency.”
The group estimated Ukraine has yet to ship about 3.5 million metric tons of corn, representing about one-fifth of the corn the Eastern European country was expected to export during the 2013-14 season.
Ukraine's currency, the hryvnia, has fallen 18.5{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} versus the U.S. dollar so far this year as political tensions have mounted in the country, following the Feb. 22 ouster of then-president Viktor Yanukovych. The crisis deepened over the weekend after Russia moved troops into Crimea, stoking fears that the country's bustling grain export business could be dented.
U.S. corn futures on the Chicago Board of Trade have risen 4.6{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} this week, jumping to the highest price since Sept. 13, as traders speculate the U.S. could experience increased demand from foreign grain buyers. Wheat futures have gained 6.4{75f28365482020b1dc6796c337e8ca3e58b9dd590dc88a265b514ff5f3f56c30} and reached the highest level in three months on Tuesday.
Ukraine's position along the Black Sea and its fertile growing conditions have elevated the country to the third-largest exporter of corn and one of the six biggest exporters of wheat and barley, according the U.S. Department of Agriculture.
Hoarding grain is a common financial tactic among producers. Farmers in Argentina have similarly held back crops in response to inflation, and some U.S. growers in recent months have resisted selling corn and soybeans after seeing prices drop sharply because of last year's bumper harvest.
“Producers, when they have grain in the bin, it's more of a currency to them than marks in the bank or dollar bills in their hand,” said Louise Gartner, owner of Spectrum Commodities, a brokerage firm based in Beavercreek, Ohio.
Uncertainty spurred by the past week's events in Ukraine likely will keep farmers skittish about selling grain for “the next week or two, at least,” Ms. Gartner said, and if the political instability continues it could bite into the coming year's crop. If farmers aren't selling their crops, they may not have as much money for fertilizer and seed, translating to a smaller harvest this year, she said.
Source: Dow Jones
Posted by Haylie Shipp
