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. Last Updated: 07/27/2016

EU Feels Ukraine's Banner Grain Year

PARIS -- The formal removal Friday of a special import tariff on East European grain imports will not lead to an instant flood of Black Sea supplies to the European Union as the move has been factored into markets for weeks, traders said.

Last month, the EU grains management committee decided to scrap, from Nov. 9, an extra import duty on Mediterranean, Black Sea and Baltic grain, in order to increase grain supplies on the internal market and drive down prices considered to be too high.

When the move was first proposed, it prompted fierce opposition from West European farmers and traders who said the demise of the extra tariff could bring massive tonnage of cheaper Eastern European grain into the 15-member bloc from the formal endorsement date.

In southern Europe, which benefits from cheaper shipping costs, traders said any effects of the measure had largely been discounted by the market weeks ago, stressing that Ukrainian grain prices seemed to have risen in recent weeks. They said drastic changes should not be expected as southern Europe had been importing more competitive wheat from East Europe before the measure was passed.

Ukraine, sitting on a 40 million ton grain crop, may export about 500,000 tons to the European Union in 2001-02 and sell some 2 million tons to South Korea, a senior government official said last week.

"We see good chances to export about 500,000 tons of grain to Europe in 2001-02," said Deputy Prime Minister Leonid Kozachenko, who is in charge of the agriculture sector.

Kozachenko said that the recent EU decision to scrap a 10-euro trade tariff was the main reason for Ukraine's move toward European markets.

Local agriculture analysts have said France, Italy and Spain are likely to be the leading importers of Ukrainian grain this season, but they forecast the ex-Soviet state's exports at between 1.0 million and 1.5 million tons.

Ukrainian grain supplies to the EU might also be increased by sales of feed grain to France.

A trade source said that a leading French producer of animal feed is to visit Kiev to discuss a deal to import "several hundred thousand tons" of grain into France. The source said that Ukrainian-origin maize, peas and feed grains would be top of the French firm's agenda.

South Korea, the Middle East and North Africa are traditional consumers of Ukrainian-origin feed wheat and this season officials have said Kiev plans to maintain its position on these markets. "Our companies have also contracted to supply about 1 million tons of grain to South Korea so far," Kozachenko said.

"Korean officials have indicated that the country might buy about 3 million tons of Ukrainian grain this season, while we forecast that exports might exceed 2 million tons." Kozachenko said feed wheat would be the key commodity in sales to South Korea.

In 2001, Ukraine harvested 21.4 million tons of wheat, compared with 10.2 million tons a year ago. Experts said feed wheat accounted for more than 60 percent of this year's total.

Officials said this year's high crop will allow the country to increase exports overall to as much as 8 million tons in 2001-02 from about 2 million tons in 2000-01. Ukraine's overall grain harvest in 2000 was 24.4 million tons.