Middle East grain buyers avoid Ukraine

March 13, 2014 - 12:49:10 am
AMMAN: Turmoil in Ukraine is driving Middle Eastern grain buyers to shy away from striking new deals there and to consider rival suppliers, a shift that is likely to push up import bills.

The Black Sea region, mostly Ukraine and Russia, has become the major source of wheat and barley for Middle East importers from Libya, Egypt and Syria to Saudi Arabia and Yemen, dislodging US, Canadian and European suppliers who once dominated the market.

Middle Eastern commodities traders and officials said fears that tensions between Russia and Ukraine could come to a head, however, are discouraging most buyers from striking deals with Ukraine suppliers for the new season, which starts in July. 

“At this time of the year, end of March, people are selling forward contracts for the new crop. Traders and trade houses start selling July shipments. This is not happening now. People are very reluctant; they don’t know what to expect,” said Tony Mudallal, a senior commodities trader in an international house.

Ukraine, the world’s third-biggest maize exporter, also has come to dominate in corn exports, taking market share from traditional suppliers such as Argentina and Brazil. “Ukraine proved to be a powerhouse in the trade of grains in the last 10 years. It affected the region positively in terms of supply, mainly in wheat, corn and barley,” Mudallal said. 

On the supply side in Ukraine, foreign trading houses are avoiding fixing new grain export contracts as well. Russian corn export prices also have been rising for two weeks. Ukraine’s main ports continue to operate, but Middle Eastern traders were concerned that shipping could be affected.

“The situation could change if fighting breaks out,” said Malak Jehad Al Akiely, a dealer in International Grain Suppliers-Jordan operation.

Middle Eastern countries have already sealed deals for around 80 percent of the grain they need for the current season to end-June, traders said.Reuters
comments powered by Disqus