How minimum export prices for grain will be calculated – details of the project

Source:  Latifundist
Україна калькулятор

The minimum export price for grain will be set for trade in all current Incoterms terms, including FOB, CPT and DAP, according to the draft version of the minimum export price mechanism reviewed by Fastmarkets.

“According to Fastmarkets’ understanding of this document, for CFR delivery contracts, the minimum export price will be derived from the FOB market prices. The minimum price will be published on the 10th day of each month or the next business day if it falls on a weekend, and will be valid until the next update,” the publication writes.

To calculate the minimum price, the official customs data for the previous month will be taken, while the government is considering using the fifth percentile as a basis, which means that the weighted average of the lowest 5% of contract prices is used to calculate the export price and a specific base for the previous month is taken.

According to the presentation and research conducted by the government, the volume of export transactions with prices below the fifth percentile will account for only 4-5% of the country’s total export activity.

To control market volatility, the government considered using a 10% discount to the fifth percentile after a study showed that market price fluctuations usually did not exceed 10-11% on a monthly basis.

Thus, according to the Ukrainian customs, the minimum export price will correspond to the fifth percentile of the previous month’s export data, with a 10% discount applied.

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