Ukrainian 2016/2017 grain exports could be 7 million tons lower than originally expected due to logistical difficulties and some companies have already redirected shipments from Ukraine to other countries, traders said.
Ukraine had planned to ship abroad around 41 million tons of grain in the 2016/2017 July-June season versus around 39 million tons a season earlier.
Volodymyr Klymenko, the head of Ukrainian grain traders union UZA, said a lack of railway grain wagons and a tightening of the rules on grain transportation by trucks were the main obstacles to exports.
“The last grain wagons were built in 1993 and now every wagon is 95% worn-out”, Klymenko said.
He said that only around 7,000 wagons could be used by traders at the present time while the country needed around 15,000 wagons to meet all its needs. Ukrainian Railways said it had 13,400 wagons.
“Every day traders order 3,600 to 3,700 wagons while the railway is supplying around 2,200 wagons”, a major foreign trader said.
“We are already considering redirection of two vessels from Ukrainian ports to European ones”, he added, noting that it would cover contracts using maize of non-Ukrainian origin.
He also added that Ukrainian grain exports in October had been expected at 4.5 million tons, but in the end totaled only about 4 million tons due to the logistic problems.
“In ports we can load even more for exports but wagons are our bottleneck”, Mykola Gorbachev from the European business association said.
Traders said new and much tougher rules on grain transport by trucks was the second serious problem that had hit exports.
This summer, Ukrainian transport authorities banned truck carriers from transporting cargo weighing over 20 tons – half the level it was previously.
Klymenko said around 14 million tons of grain were delivered to ports by trucks last season but the new rules made it possible to only deliver half of that volume this season.
He also said that new rules had doubled the transport costs.
Agriculture minister Taras Kutovy has proposed the government to establish a special ministerial commission to resolve the issues. (Daily Mail/Business World Magazine)
