We can forget about Ukrainian wheat trade with the EU under new quotas – opinion

Trading wheat with Europe under new quotas will be unprofitable for Ukrainian traders. This opinion was expressed by the director of Grain Power Artem Solovyov on Facebook.

He clarified that pre-war tariff quotas are in effect again. For the rest of this year, the European Commission has established a quota with a zero duty of 7/12 of the annual rate. This allows for the import of approximately 583 thousand tons of the entire commodity group “wheat/spelt/meslin + flour/cereals/pellets” duty-free. Outside the quota, it is necessary to pay the standard EU specific duty of €95/t.

“My rough calculations show that grain trade with Europe under such conditions can be forgotten. In a normal season, the net trade margin on wheat is approximately €3–7/t after freight, port fees, financing and hedging. An additional barrier of €95/t outside the quota completely destroys the margin. There is simply no point in such trade,” the specialist explained.

And he added that for those grain traders who work mainly with wheat, the EU quota system will lead to a loss of about 15% of revenue. This already affects the purchase prices at the elevators, logistics chains and liquidity of traders.

As a result, according to Artem Solovyov, the state budget of Ukraine may lose from 120 to 280 million euros in foreign exchange revenues, depending on changes in world prices and how much the duty “falls” on the exporter.

Tags: EU, wheat, restrictions, Ukraine