Required Report - public distribution

**Date:** 3/28/2006

**GAIN Report Number:** UP6008

UP6008

**Ukraine**

**Grain and Feed**

**Annual**

**2006**

**Approved by:**

![](media/image1.wmf)Garth Thorburn, Agricultural Attache

U.S. Embassy, Kiev

**Prepared by:**

Dmitri Prikhodko, Agricultural Specialist

**Report Highlights:**

Grain and pulse production in Ukraine in 2006 are anticipated to decline
from the previous year's level due to a significant decrease in wheat
production. Export of Ukrainian milling quality wheat will decline in MY
2006/2007 due to the forecasted 36% drop in wheat output. An anticipated
increase in barley and corn production, however, will fuel increased
competition in importing markets for the next marketing year.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Kiev \[UP1\]

\[UP\]

Table of Contents

[**Executive Summary 3**](#executive-summary)

[Wheat 3](#wheat)

[Wheat PSD Table 3](#wheat-psd-table)

[Production 3](#production)

[Consumption 3](#consumption)

[Trade 3](#trade)

[Exports 3](#exports)

[Forecast of Wheat Exports in MY 2006/2007 by Possible Destinations
3](#forecast-of-wheat-exports-in-my-20062007-by-possible-destinations)

[Wheat Exports From Ukraine (February-March 2006\*)
3](#wheat-exports-from-ukraine-february-march-2006)

[Imports 3](#imports)

[Stocks 3](#stocks)

[Barley 3](#barley)

[Production 3](#production-1)

[Barley PSD Table 3](#barley-psd-table)

[Consumption 3](#consumption-1)

[Exports 3](#exports-1)

[Forecast of Barley Exports in MY 2006/2007 By Possible Destinations
3](#forecast-of-barley-exports-in-my-20062007-by-possible-destinations)

[Stocks 3](#stocks-1)

[Corn 3](#corn)

[Corn PSD Table 3](#corn-psd-table)

[Production 3](#production-2)

[Consumption 3](#consumption-2)

[Trade 3](#trade-1)

[Forecast of Corn Exports in MY 2006/2007 By Possible Destinations
3](#forecast-of-corn-exports-in-my-20062007-by-possible-destinations)

[Stocks 3](#stocks-2)

[Rye 3](#rye)

[Rye PSD Table 3](#rye-psd-table)

[Production 3](#production-3)

[Consumption 3](#consumption-3)

[Trade 3](#trade-2)

[Stocks 3](#stocks-3)

[Oats 3](#oats)

[Oats PSD Table 3](#oats-psd-table)

[Peas 3](#peas)

[Peas PSD Table 3](#peas-psd-table)

[Production 3](#production-4)

[Exports 3](#exports-2)

[Pea Exports From Ukraine (HS 071310)
3](#pea-exports-from-ukraine-hs-071310)

[Policy (all grains) 3](#policy-all-grains)

[Tariffs on Grain Transportation by Railroad in Ukraine
3](#tariffs-on-grain-transportation-by-railroad-in-ukraine)

[Statistical Tables 3](#statistical-tables)

[Final Statistics on Grain and Pulse Production in Ukraine in 2005
3](#final-statistics-on-grain-and-pulse-production-in-ukraine-in-2005)

[Distribution of Wheat Stocks in Ukraine by Quality, 1,000 MT, %
3](#distribution-of-wheat-stocks-in-ukraine-by-quality-1000-mt)

[Soft Wheat Quality Requirements (Per State Standard of Ukraine DSTU
3768)
3](#soft-wheat-quality-requirements-per-state-standard-of-ukraine-dstu-3768)

# Executive Summary

Grain and pulse (wheat, barley, corn, rye, oats and peas) production in
Ukraine is forecast to decline by an estimated 14% from the previous
year due to the significant decrease in wheat production. This lower
anticipated production will be reflected mainly in reduced grain exports
and stocks in marketing year (MY) 2006/2007.

Dry weather and other factors contributed to a significant reduction in
the area sown with winter wheat -- Ukraine's major crop -- in Fall 2005.
Poor crop condition and low temperatures in January 2006 further reduced
production perspectives. Although, expected expansion of the area under
spring barley, wheat, corn, and other cereals is expected to partially
compensate for the reduced wheat output.

A reduction in the supply of wheat will be reflected in diminished
exports and feed consumption in marketing year (MY) 2006/2006.
**Ukrainian exports of milling wheat will decrease** especially to
Middle East and North Africa markets, the price-sensitive regions that
have purchased predominantly milling-quality wheat from Ukraine in
recent years. It is expected that limited offers of feed-quality wheat
will continue to be available for export to traditional destinations in
MY 2006/2007. Unlike wheat, barley and corn exports are anticipated to
increase in MY 2006/2007 from the current marketing year's level
reflecting higher anticipated production. Therefore, competition from
Ukraine in traditional barley and corn importing countries will likely
increase in MY 2006/2007.

Increased corn and barley production will allow farmers and compound
feed producers to offset the reduction in availability of feed wheat and
slightly increase overall feed utilization.

The Government of Ukraine (GOU) will continue to intervene in grain
markets in MY 2006/2007 by implementing legislative provisions that were
adopted in 2004. Government intervention will be conducted via increased
direct farm payments and price support programs in MY 2006/2007. The GOU
might also impose export limitations if domestic milling wheat prices
increase to a level beyond which significant budget subsidies would be
necessary to keep bread prices low.

# Wheat

## Wheat PSD Table

  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Ukraine**                                                                                          

  **Wheat**                                                                                            

                       **2004**    **Revised**   **2005**    **Estimate**   **2006**    **Forecast**   **UOM**

                       **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                       Official    Estimate      Official    Estimate       Official    Estimate       
                       \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                    07/2004                   07/2005                    07/2006        MM/YYYY
  Begin**                                                                                              

  Area Harvested       5900        5900          6570        6570           0           4800           (1000 HA)

  Beginning Stocks     1126        1200          2609        2859           2759        2809           (1000 MT)

  Production           17500       17500         18700       18700          0           12000          (1000 MT)

  TOTAL Mkt. Yr.       34          10            50          50             0           200            (1000 MT)
  Imports                                                                                              

  Jul-Jun Imports      34          10            50          50             0           200            (1000 MT)

  Jul-Jun Import U.S.  0           0             0           0              0           0              (1000 MT)

  TOTAL SUPPLY         18660       18710         21359       21609          2759        15009          (1000 MT)

  TOTAL Mkt. Yr.       4351        4351          5500        5700           0           1500           (1000 MT)
  Exports                                                                                              

  Jul-Jun Exports      4351        4351          5500        5700           0           1500           (1000 MT)

  Feed Dom.            2100        2100          3100        3000           0           2500           (1000 MT)
  Consumption                                                                                          

  TOTAL Dom.           11700       11500         13100       13100          0           11709          (1000 MT)
  Consumption                                                                                          

  Ending Stocks        2609        2859          2759        2809           0           1800           (1000 MT)

  TOTAL DISTRIBUTION   18660       18710         21359       21609          0           15009          (1000 MT)
  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

## Production

In 2006, wheat production in Ukraine is forecast to decline by nearly
40%, compared to the previous year. The main reasons are reduced area
planted with winter wheat in Fall 2005 and lower-than-average yield
expectations. Ukrainian farmers significantly reduced the area of winter
wheat planted due to dry weather and economic conditions (see GAIN
report UP 6001 entitled ["Winter Wheat Area Drops
19%"](http://www.fas.usda.gov/gainfiles/200601/146176555.pdf)). Poor
crop conditions, low temperatures and insufficient protective snow cover
in late January 2006 further reduced production perspectives (GAIN
Report UP6005 ["Frost Bites 2006
Crop"](http://www.fas.usda.gov/gainfiles/200602/146176742.pdf)).

The 2006 wheat production forecast provided in the PSD is based on the
following assumptions:

-   18% of the area planted with winter wheat in Ukraine in Fall 2006
    (5.14 million hectares) was damaged (i.e. will require re-sowing
    with spring crops 2006). The extremely cold temperatures (below --
    18° C) and the absence (or insignificance) of the protective snow
    cover on January 18-19, 2006 were the main factors behind the freeze
    damage estimates (occurred predominantly in Luhansk, Donetsk,
    Kharkiv and Sumy Oblast).

-   While producing the estimate of winter damage, FAS-Kiev assumed that
    10% of the fields that were assessed as weak and 100% of
    non-sprouted fields will require re-sowing. According to crop
    condition reports conducted immediately prior to the January 18-19,
    2006 frosts, approximately 1.5 million hectares of winter wheat were
    assessed as weak. For instance, crop assessment reports that had
    been conducted prior to the cold weather snap in January indicated
    that 33% of winter wheat in Dnipropetrovsk Oblast was in bad
    condition. Underdeveloped wheat plants (in 1-3 leave stage) are less
    resistant to low temperatures compared with fully tillered plants.
    Therefore, tests conducted by the Ukrainian Hydrometeorology Center
    *Ukrhydrometcenter* in Dnipropetrovks Oblast in February 2006 found
    that 31-50% of wheat plants died in 34% of tested samples. These
    fields will have to be re-sown.

-   Winter wheat yields in 2006 will likely be lower than average due to
    the thinning in remaining fields.

-   The area planted with spring wheat in 2006 will increase to 600,000
    hectares in response to high winterkill.

The State Statistics Committee of Ukraine published its final 2005 wheat
production estimate in early March 2006. Official production statistics
are provided in the Statistical Tables Section and contain the breakdown
of spring and winter wheat areas, yields and production -- information
that was not previously available.

# Consumption

Reduced wheat production in 2006 will be reflected in much lower feed
usage compared with the current marketing year. Wheat consumption for
food and industrial purposes (ethanol production) in MY 2006/2007 is
anticipated to decline insignificantly. It is expected that feed barley
and corn will replace feed wheat in livestock and feeding rations.

# Trade

## Exports

Wheat exports in MY 2006/2007 are forecast to decline to **1.5 million**
tons due to the anticipated decrease in production and, therefore,
bullish price expectations. Milling-quality wheat exports in MY
2006/2007 to price-sensitive markets in Africa and Middle East are
forecasted to decrease significantly in order to meet domestic demand.
MY 2006/2007 feed-quality wheat exports to traditional destinations will
also decrease but not as significantly as exports of milling wheat. The
table below provides a forecast of wheat exports by region for the next
marketing year:

### Forecast of Wheat Exports in MY 2006/2007 by Possible Destinations

+-----------+----+---+------+---+------------------------------------+
| **Desti   | *  | * | **MY | * | **Reason**                         |
| nations** | *J | * | 2    | * |                                    |
|           | ul | S | 006/ | S |                                    |
|           | 05 | h | 2007 | h |                                    |
|           | -J | a | F    | a |                                    |
|           | an | r | orec | r |                                    |
|           | 0  | e | ast, | e |                                    |
|           | 6, | , | 1    | , |                                    |
|           | 1  | % | ,000 | % |                                    |
|           | ,0 | * | MT** | * |                                    |
|           | 00 | * |      | * |                                    |
|           | MT |   |      |   |                                    |
|           | ** |   |      |   |                                    |
+-----------+----+---+------+---+------------------------------------+
| #####     | 1  | 3 | 300  | 2 | Reduced availability of milling    |
| ## Africa | ,4 | 3 |      | 0 | quality wheat from Ukraine         |
|           | 32 | % |      | % |                                    |
+-----------+----+---+------+---+------------------------------------+
| **EU-25** | 1  | 2 | 500  | 3 | Reduced demand from Spain and      |
|           | ,0 | 4 |      | 3 | remaining TRQ restriction in the   |
|           | 39 | % |      | % | EU                                 |
+-----------+----+---+------+---+------------------------------------+
| **S       | 9  | 2 | 300  | 2 | Deliveries predominantly to        |
| outh-East | 50 | 2 |      | 0 | traditional feed wheat buyers      |
| Asia**    |    | % |      | % |                                    |
+-----------+----+---+------+---+------------------------------------+
| **Middle  | 7  | 1 | 300  | 2 | Reduced availability of milling    |
| East**    | 49 | 7 |      | 0 | quality wheat from Ukraine         |
|           |    | % |      | % |                                    |
+-----------+----+---+------+---+------------------------------------+
| **Other   | 1  | 3 | 100  | 7 |                                    |
| Co        | 38 | % |      | % |                                    |
| untries** |    |   |      |   |                                    |
+-----------+----+---+------+---+------------------------------------+
| **Total** | *  | * | *    | * | **Lower exports due to anticipated |
|           | *4 | * | *1,5 | * | production decrease**              |
|           | ,3 | 1 | 00** | 1 |                                    |
|           | 09 | 0 |      | 0 |                                    |
|           | ** | 0 |      | 0 |                                    |
|           |    | % |      | % |                                    |
|           |    | * |      | * |                                    |
|           |    | * |      | * |                                    |
+-----------+----+---+------+---+------------------------------------+

**MY 2005/2006** export **estimates** were increased to reflect expected
shipments before the end of the marketing year. The Ukrainian
Association of Commodity Exchanges reported registration of wheat export
contracts at 6.4 million tons since the beginning of the marketing year
(2.8 million of feed-quality and 3.6 million for milling-quality wheat).
The rate of default or cancellation of export contracts registered by
the Ukrainian Commodity Exchanges remains high. The GOU has also
considered introducing export licensing in order to prevent wheat
shortages in anticipation of lower production in MY 2006/2007.
Therefore, FAS-Kiev believes that actual MY 2005/2006 exports will be
less than the quantity registered for export by the exchanges.

Official statistics recorded July 2005-January 2006 wheat exports at 4.3
million tons. According to available port statistics, February export
shipments approximated 330,000 tons. Exports in March are expected to
total 300,000 tons. With wheat exports reaching nearly 5.0 million tons
in July 2005 - March 2006 and considering outstanding export
commitments, FAS-Kiev suggests increasing Ukraine's MY 2005/2006 export
estimate as indicated in the Wheat PSD Table.

### Wheat Exports From Ukraine (February-March 2006\*)

  ------------------------------------------- ---------------------------
  **Destination**                             **1,000 MT**

  Italy                                       90

  Bangladesh                                  90

  Israel                                      75

  Yemen                                       65

  Egypt                                       45

  Kenya                                       32

  Algeria                                     25

  Greece                                      20

  Sudan                                       15

  Other countries                             173

  **Total estimate**                          **630**
  ------------------------------------------- ---------------------------

*\*Preliminary estimate based on port reports and FAS-Kiev interviews
with grain traders*

For information on exports from July 2005-January 2006, please refer to
GAIN Report ["Frost Bites 2006
Crop"](http://www.fas.usda.gov/gainfiles/200602/146176742.pdf).

## Imports

Ukraine's MY 2006/2007 wheat imports will likely increase in response to
reduced production. However, imports will be limited to milling wheat
supplies from Kazakhstan and/or the Russian Federation. Ukraine has
signed free-trade agreements with these countries; therefore, importers
can avoid paying the standard EUR40 per metric ton import duty.

# Stocks

MY 2006/2007 ending stocks will be lower than in MY 2005/2006 due to
reduced supply. Information on monthly wheat stocks held by farmers,
elevators and processors is provided below. Please note that the stock
information provided below does not account for wheat stored by small
farms and private households that produced 18% of all wheat in Ukraine
in 2005.

For the first time, FAS-Kiev is providing the **quality structure of
Ukrainian wheat stocks**. Please see Statistical Tables Section at the
end of this report for more information on quantities and quality of
commercially available wheat in Ukraine. The Ministry of Agricultural
Policy of Ukraine compiled this information based on reports obtained
from 14,237 stockholders who held more than 50 MT of grain.

![](media/image2.wmf){width="4.913888888888889in"
height="3.338888888888889in"}

# Barley

## Production

Barley production in 2006 is forecast to increase compared with the
previous year. Spring barley is the main barley crop in Ukraine;
therefore, winter barley damage is not expected to significantly reduce
production perspectives. The following assumptions were made while
preparing the 2006 barley production forecast:

-   15% of the 539,000 hectares of winter barley planted in Fall 2005
    have perished and will be re-sown.

-   The winter damage threshold for barley was assumed to be -12° C with
    no protective snow cover. This threshold was reached on January 18,
    2006 in Luhansk, Kharkiv, Donetsk Oblast, the minor winter barley
    producing regions.

-   The main damage was caused by thinning in the main producing
    regions, a result of poor crop establishment before the beginning of
    winter. 30% of winter barley area was in a bad condition in
    December 2005. In Mykolayiv Oblast, the main winter barley producing
    region in Ukraine, nearly 40% of its 112,000 hectares were in bad
    condition while 5% failed to sprout at all. According to
    *Ukhydrometcenter* estimates, 31-50% of barley plants perished in
    29% of the samples taken from this oblast after the cold weather
    spell in January 2006. In FAS-Kiev's estimate of winter barley
    damage, it is assumed that 30% of the fields that were assessed as
    weak prior to entering winter will require re-sowing in Spring 2006.

-   If weather permits, the area under spring barley will increase to
    4.7 million hectares (680,000 hectares more than planted last year)

-   Spring barley yield is slightly lower than the average for 2000-2005
    (excluding 2003) due to the delayed spring.

## Barley PSD Table

  ------------------ ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Ukraine**                                                                                        

  **Barley**                                                                                         

                     **2004**    **Revised**   **2005**    **Estimate**   **2006**    **Forecast**   **UOM**

                     **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                     Official    Estimate      Official    Estimate       Official    Estimate       
                     \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                  07/2004                   07/2005                    07/2006        MM/YYYY
  Begin**                                                                                            

  Area Harvested     4500        4500          4350        4350           0           5000           (1000 HA)

  Beginning Stocks   796         438           1191        836            971         956            (1000 MT)

  Production         11100       11100         9000        9000           0           10500          (1000 MT)

  TOTAL Mkt. Yr.     7           10            80          20             0           10             (1000 MT)
  Imports                                                                                            

  Oct-Sep Imports    11          10            80          20             0           10             (1000 MT)

  Oct-Sep Import     0           0             0           0              0           0              (1000 MT)
  U.S.                                                                                               

  TOTAL SUPPLY       11903       11548         10271       9856           971         11466          (1000 MT)

  TOTAL Mkt. Yr.     4312        4312          4000        4000           0           4500           (1000 MT)
  Exports                                                                                            

  Oct-Sep Exports    3992        3992          4000        4300           0           4500           (1000 MT)

  Feed Dom.          4700        4700          3800        3200           0           4200           (1000 MT)
  Consumption                                                                                        

  TOTAL Dom.         6400        6400          5300        4900           0           6100           (1000 MT)
  Consumption                                                                                        

  Ending Stocks      1191        836           971         956            0           866            (1000 MT)

  TOTAL DISTRIBUTION 11903       11548         10271       9856           0           11466          (1000 MT)
  ------------------ ----------- ------------- ----------- -------------- ----------- -------------- ---------

## Consumption

The use of barley for feed will likely increase **in MY 2006/2007**
compared with the current marketing year due to increased production and
feed demand (please refer to Ukraine 2005
[Livestock](http://www.fas.usda.gov/gainfiles/200508/146130674.pdf) and
[Poultry](http://www.fas.usda.gov/gainfiles/200509/146131037.pdf) Annual
Reports for livestock and poultry inventories).

Barley malt production in MY 2006/2007 is also anticipated to increase
due to increasing demand from the Ukrainian brewing industry. The growth
in malt production, however, will not be as significant in MY 2006/2007
as in the current marketing year. FAS-Kiev had to revise down the
official estimate of feed barley consumption in MY 2005/2006 to account
for increased barley utilization for malting purposes.

Due to the launch of new malting production facilities (see [Ukraine
2005 Grain Annual
Report](http://www.fas.usda.gov/gainfiles/200504/146119291.pdf) for
details), malt production in MY 2005/2006 is now expected to increase by
40% compared with MY 2004/2005. According to official statistics, malt
production increased from 171,000 tons in July 2004-January 2005 to
238,000 tons in July 2005-January 2006. MY 2004/2005 malt production
totaled 318,000 tons, requiring approximately 404,000 tons of barley.

## Exports

In **MY 2006/2007,** barley exports are expected to set another record
**at 4.5 million tons.** This forecast reflects increased production and
expected domestic feed demand. Therefore, competition from Ukrainian
barley in international markets will increase. It is expected that Saudi
Arabia will remain the main destination point in MY 2006/2007 accounting
for nearly 60% of Ukrainian barley exports. The remaining exports will
land at other traditional destinations in the Middle East and North
Africa (see table below).

### Forecast of Barley Exports in MY 2006/2007 By Possible Destinations

+---------------+---------+-------+-------+-------+-------+-------+
| ######        | **Jul   |       | **Jul |       | **MY  |       |
|  Destinations | 04-Jun  |       | 0     |       | 2006  |       |
|               | 05**    |       | 5-Mar |       | /2007 |       |
|               |         |       | 0     |       | Fore  |       |
|               |         |       | 6\*** |       | cast\ |       |
|               |         |       |       |       | *\*** |       |
+---------------+---------+-------+-------+-------+-------+-------+
|               | **1,000 | **S   | **    | **S   | **    | **S   |
|               | MT**    | hare, | 1,000 | hare, | 1,000 | hare, |
|               |         | %**   | MT**  | %**   | MT**  | %**   |
+---------------+---------+-------+-------+-------+-------+-------+
| Saudi Arabia  | 1,806   | 42%   | 1,940 | 58%   | 2,500 | 56%   |
+---------------+---------+-------+-------+-------+-------+-------+
| Jordan        | 499     | 12%   | 315   | 9%    | 500   | 11%   |
+---------------+---------+-------+-------+-------+-------+-------+
| Iran          | 433     | 10%   | 388   | 12%   | 400   | 9%    |
+---------------+---------+-------+-------+-------+-------+-------+
| Syria         | 428     | 10%   | 288   | 9%    | 300   | 7%    |
+---------------+---------+-------+-------+-------+-------+-------+
| Israel        | 372     | 9%    | 45    | 1%    | 400   | 9%    |
+---------------+---------+-------+-------+-------+-------+-------+
| Libya         | 215     | 5%    | 48    | 1%    | 100   | 2%    |
+---------------+---------+-------+-------+-------+-------+-------+
| Others or     | 562     | 13%   | 295   | 9%    | 300   | 7%    |
| Unknown       |         |       |       |       |       |       |
+---------------+---------+-------+-------+-------+-------+-------+
| ####### Total | **      | **1   | **3,  | **1   | **4,  | **1   |
|               | 4,315** | 00%** | 319** | 00%** | 500** | 00%** |
+---------------+---------+-------+-------+-------+-------+-------+

*FAS-Kiev estimate; \*\* - FAS Kiev Forecast*

The barley export estimate for MY 2005/2006 remains unchanged while
October 2005-September 2006 trade estimate was increased. During July 1,
2005-March 17, 2006, the Ukrainian Commodity Exchange registered a total
of 3.8 million tons for export. According to official statistics, actual
barley exports in July 2005 -- January 2006 totaled 2.6 million tons.
FAS-Kiev estimates February 2006 exports at 500,000 tons and March 2006
exports at approximately 200,000 tons.

## 

## Stocks

Ending stocks of barley in MY 2006/2007 will decrease to reflect higher
usage. Barley stocks, however, are expected to be higher than in MY
2004/2005. Monthly trends of commercially available stocks (those held
by elevators and processors) over the past three marketing years are
provided below. Please note that the graph does not account for barley
stored by small farms and private households. These two farm categories
accounted for almost 30% of all barley production in Ukraine in 2005 and
are believed to have significant stocks as well.

![](media/image3.wmf){width="4.613194444444445in"
height="3.1277777777777778in"}

# Corn

## Corn PSD Table

  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Ukraine**                                                                                          

  **Corn**                                                                                             

                       **2004**    **Revised**   **2005**    **Estimate**   **2006**    **Forecast**   **UOM**

                       **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                       Official    Estimate      Official    Estimate       Official    Estimate       
                       \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                    10/2004                   10/2005                    10/2006        MM/YYYY
  Begin**                                                                                              

  Area Harvested       2300        2300          1660        1660           0           2100           (1000 HA)

  Beginning Stocks     844         737           1324        1202           1074        952            (1000 MT)

  Production           8800        8800          7150        7150           0           7500           (1000 MT)

  TOTAL Mkt. Yr.       14          0             0           0              0           0              (1000 MT)
  Imports                                                                                              

  Oct-Sep Imports      14          0             0           0              0           0              (1000 MT)

  Oct-Sep Import U.S.  4           0             0           0              0           0              (1000 MT)

  TOTAL SUPPLY         9658        9537          8474        8352           1074        8452           (1000 MT)

  TOTAL Mkt. Yr.       2334        2335          2300        2300           0           2400           (1000 MT)
  Exports                                                                                              

  Oct-Sep Exports      2334        2335          2300        2300           0           2400           (1000 MT)

  Feed Dom.            5300        5300          4400        4400           0           4500           (1000 MT)
  Consumption                                                                                          

  TOTAL Dom.           6000        6000          5100        5100           0           5100           (1000 MT)
  Consumption                                                                                          

  Ending Stocks        1324        1202          1074        952            0           952            (1000 MT)

  TOTAL DISTRIBUTION   9658        9537          8474        8352           0           8452           (1000 MT)
  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

## Production

As with barley, Ukrainian farmers will likely expand the area planted
with corn in 2006 to compensate for reduced winter wheat plantings.
Farmers, however, are unlikely to dedicate as many hectares to corn in
2006 as in 2004 because soybeans and rapeseed currently seem to be more
profitable than corn.

## Consumption

Consumption of corn feed will also increase in MY 2006/2007 compared
with the current marketing year to reflect higher production and
increasing feed demand. Corn is expected to become an important feed
energy source and will partially replace wheat in MY 2006/2007 to meet
the increasing needs of the growing swine and broiler inventories (see
Ukraine 2005
[Livestock](http://www.fas.usda.gov/gainfiles/200508/146130674.pdf) and
[Poultry](http://www.fas.usda.gov/gainfiles/200509/146131037.pdf) Annual
Reports).

## Trade

### Forecast of Corn Exports in MY 2006/2007 By Possible Destinations

+-------------------+-------+-------+-------+-------+-------+--------+
| ##                | **Oct |       | **Oct |       | **MY  |        |
| #### Destinations | 0     |       | 0     |       | 2006  |        |
|                   | 4-Sep |       | 5-Mar |       | /2007 |        |
|                   | 05**  |       | 0     |       | Fore  |        |
|                   |       |       | 6\*** |       | cast\ |        |
|                   |       |       |       |       | *\*** |        |
+-------------------+-------+-------+-------+-------+-------+--------+
|                   | **    | **S   | **    | **S   | **    | **     |
|                   | 1,000 | hare, | 1,000 | hare, | 1,000 | Share, |
|                   | MT**  | %**   | MT**  | %**   | MT**  | %**    |
+-------------------+-------+-------+-------+-------+-------+--------+
| Israel            | 294   | 13%   | 249   | 15%   | 300   | 13%    |
+-------------------+-------+-------+-------+-------+-------+--------+
| Syria             | 113   | 5%    | 192   | 11%   | 200   | 8%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Spain             | 329   | 14%   | 183   | 11%   | 150   | 6%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Algeria           | 103   | 4%    | 156   | 9%    | 150   | 6%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Libya             | 101   | 4%    | 154   | 9%    | 150   | 6%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Tunisia           | 165   | 7%    | 151   | 9%    | 150   | 6%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Egypt             | 54    | 2%    | 150   | 9%    | 200   | 8%     |
+-------------------+-------+-------+-------+-------+-------+--------+
| Belarus           | 254   | 11%   | 111   | 7%    | 300   | 13%    |
+-------------------+-------+-------+-------+-------+-------+--------+
| Iran              | 517   | 22%   | 42    | 2%    | 400   | 17%    |
+-------------------+-------+-------+-------+-------+-------+--------+
| Others or Unknown | 409   | 17%   | 288   | 17%   | 400   | 17%    |
+-------------------+-------+-------+-------+-------+-------+--------+
| **Total**         | **2,  | **1   | **1,  | **1   | **2   | **     |
|                   | 339** | 00%** | 676** | 00%** | 400** | 100%** |
+-------------------+-------+-------+-------+-------+-------+--------+

*FAS-Kiev estimate; \*\* - FAS Kiev Forecast*

The anticipated increase in corn production in 2006 will also allow for
increased corn exports in MY 2006/2007 compared with MY 2005/2006.
Assuming normal crop quality, Ukrainian corn will continue to be
exported to traditional and new markets.

FAS-Kiev estimates 1.9 million tons of corn were exported from Ukraine
in October 2005-March 2006 (officially recorded exports were 1.5 million
in October 2005-January 2006 and estimated exports in February--March
2006 are 0.4 million tons). Therefore, for the current marketing year
(MY 2005/2006), the export estimate remains unchanged.

## Stocks

Corn ending stocks in MY 2006/2007 are currently forecasted at the
revised MY 2006/2007 level. Higher anticipated supply will be adsorbed
by the domestic feed industry and exported. Last year, private
households produced approximately 36% of all corn in Ukraine. Households
will continue to be an important stock-holder for the next marketing
year; therefore, approximately 30-35% of corn will not be accessible to
the trade.

![](media/image4.wmf){width="4.419444444444444in"
height="3.1638888888888888in"}

# Rye

## Rye PSD Table

  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Ukraine**                                                                                          

  **Rye**                                                                                              

                       **2004**    **Revised**   **2005**    **Estimate**   **2006**    **Forecast**   **UOM**

                       **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                       Official    Estimate      Official    Estimate       Official    Estimate       
                       \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                    07/2004                   07/2005                    07/2006        MM/YYYY
  Begin**                                                                                              

  Area Harvested       725         725           615         615            0           350            (1000 HA)

  Beginning Stocks     140         188           346         344            206         294            (1000 MT)

  Production           1600        1600          1050        1050           0           700            (1000 MT)

  TOTAL Mkt. Yr.       10          0             10          0              0           0              (1000 MT)
  Imports                                                                                              

  Oct-Sep Imports      10          0             10          0              0           0              (1000 MT)

  Oct-Sep Import U.S.  0           0             0           0              0           0              (1000 MT)

  TOTAL SUPPLY         1750        1788          1406        1394           206         994            (1000 MT)

  TOTAL Mkt. Yr.       104         104           50          50             0           5              (1000 MT)
  Exports                                                                                              

  Oct-Sep Exports      122         122           50          50             0           5              (1000 MT)

  Feed Dom.            300         300           150         150            0           50             (1000 MT)
  Consumption                                                                                          

  TOTAL Dom.           1300        1340          1150        1050           0           850            (1000 MT)
  Consumption                                                                                          

  Ending Stocks        346         344           206         294            0           139            (1000 MT)

  TOTAL DISTRIBUTION   1750        1788          1406        1394           0           994            (1000 MT)
  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

## Production

Farmers significantly reduced the area under winter rye in Fall 2005 due
to dry weather (refer to GAIN report UP 6001 entitled ["Winter Wheat
Area Drops
19%"](http://www.fas.usda.gov/gainfiles/200601/146176555.pdf)). In
addition to weather conditions last fall, rye prices at the time of
planting were \$66-70 per ton (12-15% below those in Fall 2004) while
the cost of input prices significantly increased thus reducing farmers'
interest in this crop.

Winter rye did not suffer from the cold weather in January 2006 as badly
as winter wheat because of its higher resistance to low temperatures.
FAS-Kiev estimates that 9% of winter rye planted will not be harvested
due to weather and other factors. Spring rye plantings are negligible
(less than 1% of the total rye area) and hardly affect rye production.

FAS-Kiev expects that the rye area harvested in 2006 will be the lowest
in at past 20 years.

Assuming average yields, rye production will be the lowest since 2003,
the lowest production year on record. The gradual reduction of rye
production in Ukraine is a result of limited rye bread consumption and
weak export demand.

## Consumption

Feed, industrial and human consumption of rye are anticipated to
decrease in MY 2006/2007 and reflects lower production. The rye
consumption estimate in MY 2005/2006 was revised downwards to account
for the market dynamics of official stock estimates (see below).

## Trade 

## 

FAS-Kiev forecasts that rye exports for the next marketing year will be
significantly lower than in MY 2005/2006. Lower forecasted crop output
in 2006 will generate a bullish price trend and reduced attractiveness
of rye from Ukraine in traditional markets.

According to FAS-Kiev estimates, Ukraine exported 37,000 tons in July
2005-March 2006 to the Middle East and the EU. Considering significant
available rye stocks, FAS-Kiev did not change the MY 2005/2006 export
estimate.

## Stocks

Rye stocks that have accumulated over the past two marketing years will
be somewhat depleted by the end of MY 2006/2007 due to expected lower
production.

![](media/image5.wmf){width="4.471527777777778in"
height="3.1909722222222223in"}

# Oats

## Oats PSD Table

  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------
  **Ukraine**                                                                                          

  **Oats**                                                                                             

                       **2004**    **Revised**   **2005**    **Estimate**   **2006**    **Forecast**   **UOM**

                       **USDA      **Post        **USDA      **Post         **USDA      **Post         ** **
                       Official    Estimate      Official    Estimate       Official    Estimate       
                       \[Old\]**   \[New\]**     \[Old\]**   \[New\]**      \[Old\]**   \[New\]**      

  **Market Year                    07/2004                   07/2005                    07/2006        MM/YYYY
  Begin**                                                                                              

  Area Harvested       510         510           450         450            0           480            (1000 HA)

  Beginning Stocks     40          40            23          50             18          35             (1000 MT)

  Production           1000        1000          800         790            0           850            (1000 MT)

  TOTAL Mkt. Yr.       0           0             0           0              0           0              (1000 MT)
  Imports                                                                                              

  Oct-Sep Imports      0           0             0           0              0           0              (1000 MT)

  Oct-Sep Import U.S.  0           0             0           0              0           0              (1000 MT)

  TOTAL SUPPLY         1040        1040          823         840            18          885            (1000 MT)

  TOTAL Mkt. Yr.       17          20            5           5              0           5              (1000 MT)
  Exports                                                                                              

  Oct-Sep Exports      17          20            5           5              0           5              (1000 MT)

  Feed Dom.            850         790           650         650            0           630            (1000 MT)
  Consumption                                                                                          

  TOTAL Dom.           1000        970           800         800            0           800            (1000 MT)
  Consumption                                                                                          

  Ending Stocks        23          50            18          35             0           80             (1000 MT)

  TOTAL DISTRIBUTION   1040        1040          823         840            0           885            (1000 MT)
  -------------------- ----------- ------------- ----------- -------------- ----------- -------------- ---------

The area under oats is anticipated to increase in 2006. However, this
increase will not be significant. Most likely, oats area in 2006 will be
lower than in 2004. FAS-Kiev revised downwards the 2005 oat production
estimate to reflect lower yields reported in the final official
production statistics (see Statistical Tables Section).

Considering declining horse inventories, FAS-Kiev expects that oats feed
consumption will decrease in MY 2006/2007 while stocks will increase.

# Peas

## Peas PSD Table

+-------------------+----+--------+----+-------+----+-------+------+
| ###### Ukraine    |    |        |    |       |    |       |      |
+-------------------+----+--------+----+-------+----+-------+------+
| **Peas**          |    |        |    |       |    |       |      |
+-------------------+----+--------+----+-------+----+-------+------+
|                   | ** | **Rev  | ** | **    | ** | **    | **U  |
|                   | 20 | ised** | 20 | Estim | 20 | Forec | OM** |
|                   | 04 |        | 05 | ate** | 06 | ast** |      |
|                   | ** |        | ** |       | ** |       |      |
+-------------------+----+--------+----+-------+----+-------+------+
|                   | ** | **Post | ** | *     | ** | *     | *    |
|                   | US | Es     | US | *Post | US | *Post | * ** |
|                   | DA | timate | DA | Est   | DA | Est   |      |
|                   | Of | \[N    | Of | imate | Of | imate |      |
|                   | fi | ew\]** | fi | \[Ne  | fi | \[Ne  |      |
|                   | ci |        | ci | w\]** | ci | w\]** |      |
|                   | al |        | al |       | al |       |      |
|                   | \  |        | \  |       | \  |       |      |
|                   | [O |        | [O |       | [O |       |      |
|                   | ld |        | ld |       | ld |       |      |
|                   | \] |        | \] |       | \] |       |      |
|                   | ** |        | ** |       | ** |       |      |
+-------------------+----+--------+----+-------+----+-------+------+
| **Market Year     |    | 0      |    | 07    |    | 07    | MM/  |
| Begin**           |    | 7/2004 |    | /2005 |    | /2006 | YYYY |
+-------------------+----+--------+----+-------+----+-------+------+
| **Area            | 0  | 260    | 0  | 311   | 0  | 330   | (    |
| Harvested**       |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | HA)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Beginning       | 0  | 13     | 0  | 26    | 0  | 20    | (    |
| Stocks**          |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Production**    | 0  | 635    | 0  | 620   | 0  | 650   | (    |
|                   |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **TOTAL Mkt. Yr.  | 0  | 0      | 0  | 0     | 0  | 0     | (    |
| Imports**         |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Jul-Jun         | 0  | 0      | 0  | 0     | 0  | 0     | (    |
| Imports**         |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Jul-Jun Import  | 0  | 0      | 0  | 0     | 0  | 0     | (    |
| U.S.**            |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **TOTAL SUPPLY**  | 0  | 648    | 0  | 646   | 0  | 670   | (    |
|                   |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **TOTAL Mkt. Yr.  | 0  | 202    | 0  | 200   | 0  | 230   | (    |
| Exports**         |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Jul-Jun         | 0  | 202    | 0  | 200   | 0  | 230   | (    |
| Exports**         |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Feed Dom.       | 0  | 350    | 0  | 350   | 0  | 340   | (    |
| Consumption**     |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **TOTAL Dom.      | 0  | 420    | 0  | 426   | 0  | 420   | (    |
| Consumption**     |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **Ending Stocks** | 0  | 26     | 0  | 20    | 0  | 20    | (    |
|                   |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+
| **TOTAL           | 0  | 648    | 0  | 646   | 0  | 670   | (    |
| DISTRIBUTION**    |    |        |    |       |    |       | 1000 |
|                   |    |        |    |       |    |       | MT)  |
+-------------------+----+--------+----+-------+----+-------+------+

## Production

Peas have become an important export-oriented crop for Ukraine.
Therefore, farmers are expected to increase the pea area in Spring 2006.
Production of this crop in 2006 is forecasted to be the highest since
2000.

## Exports

Exports of peas in MY 2006/2007 are expected to increase from the MY
2005/2006 level due to the strong demand form traditional markets in
EU-25. See table below.

### Pea Exports From Ukraine (HS 071310)

  -------------------- -------------- -------------- ------------- -------------
  **Destinations**     **Jul 03-Jun   **Jul 04-Jun   **Jul-Dec     **Jul-Dec
                       04**           05**           04**          05**

  Spain                0              34,630         29,424        43,815

  Italy                9,982          16,465         13,368        39,093

  India                0              37,685         37,685        20,773

  Hungary              15,850         73,075         58,375        9,119

  Netherlands          3,744          0              0             5,939

  Austria              0              5,856          1,442         4,289

  Bangladesh           0              823            823           4,065

  United Kingdom       0              3,360          3,360         2,990

  Latvia               0              727            727           2,780

  Russia               198            887            151           1,620

  Belarus              1,426          4,103          1,731         1,300

  Reference for EU-25  30,413         140,614        112,383       109,732

  Others Not Mentioned 3,938          23,566         21,165        5,108

  **Grad Total**       **35,137**     **201,177**    **168,251**   **140,892**
  -------------------- -------------- -------------- ------------- -------------

*Data source: State Statistics Committee of Ukraine*

#  

# Policy (all grains)

The Government of Ukraine will continue to intervene in the grain market
in MY 2006/2007 via price support programs and direct per-hectare
subsidies to grain farmers. Limiting wheat exports is also a possibility
due to the anticipated decrease in production.

Thanks to increased revenues, the Government budgeted a significant
increase in direct farm subsidies in 2006. For the first time since the
disastrous MY 2003/2004, Ukrainian grain farmers expect to receive the
subsidies. On February 15,2006, GOU approved the following payments to
farmers:

-   UAH 100/ha (\$19.9/ha) for winter wheat, triticale, rye and barley
    planted in Fall 2005 (to be harvested in 2006 and marketed in MY
    2006/2007).

-   UAH 65 /ha (\$12.9/ha) for spring barley, oats, peas, corn,
    buckwheat, millet and rice that will be planted in Spring 2006 (to
    be harvested in 2006 and marketed in MY 2006/2007).

It is not yet clear at what level the GOU will establish minimum and
maximum prices in MY 2006/2007 or if GOU will enforce these prices in
commercial grain trading. The minimum (floor) price for all major grain
and oilseeds were introduced in Ukraine for the first time in June 2005.
Although these prices were set at a relatively high level (See GAIN
Report
[UP5011](http://www.fas.usda.gov/gainfiles/200506/146129949.pdf)), they
were limited to government procurement and were not enforced in
commercial trade and exports in the current marketing year.

Grain market interventions in MY 2006/2007 will be conducted through the
Agricultural Exchange, a commodity exchange institution created and
controlled by the GOU and through a limited number of accredited
exchanges in the regions. The Agricultural Exchange was established in
line with the requirements of the Law of Ukraine on Grain (adopted in
2004) and conducted the first trade session on February 21, 2006.

Bread remains an important food item in Ukraine. Many people in Ukraine
view the price of bread as a gauge that is used to measure the
effectiveness of the government's policy. If domestic milling wheat
prices increase to a level that requires significant budget subsidies,
GOU will consider enforcing the maximum (ceiling) price in commercial
trade and/or export licensing (or other export limitation measures) in
MY 2006/2007 to increase supply to domestic millers.

It is highly unlikely that the GOU will continue the policy of providing
**railroad subsidies** to grain exporters. This subsidy was utilized for
the first time in the current marketing year. According to
*Ukrzaliznytsia*, the state-owned railroad monopolist, the company lost
UAH 44 million (\$8.7 million) because GOU reduced the railroad tariff
on grain transportation to the ports by 15.26% compared with the tariff
on grain transportation within Ukraine in August-December 2005. This
subsidy was suspended on January 1, 2006. The *Ukrzaliznytsia* has been
charging the following tariffs on grain transportation since January
2006.

## Tariffs on Grain Transportation by Railroad in Ukraine

  ------------------- ----------- ------------- ------------- ------------------
  **Type of           **Average   **Tariff**                  
  transportation**    Distance,                               
                      KM**                                    

                                  **UAH/1MT**   **US\$        **US\$/1MT/1KM**
                                                equiv/1MT**   

  **Export**          569         46            9.11          0.0160

  **Import**          717         54.4          10.77         0.0150

  **Transit**         661         Х             10.3          0.0156

  **Domestic**        514         44.2          8.75          0.0170
  ------------------- ----------- ------------- ------------- ------------------

*Prepared by FAS-Kiev based on APK-Inform news dated January 30, 2006.*

# Statistical Tables

## Final Statistics on Grain and Pulse Production in Ukraine in 2005

+---------------------------+----------+----------+---------+--------+
| ######## Crop             | **Final  | **Area   | **Produ | **Y    |
|                           | (co      | Har      | ction** | ield** |
|                           | rrected) | vested** |         |        |
|                           | Area     |          |         |        |
|                           | P        |          |         |        |
|                           | lanted** |          |         |        |
+---------------------------+----------+----------+---------+--------+
|                           | **1,000  | **1,000  | **1,000 | **M    |
|                           | ha**     | ha**     | MT**    | T/ha** |
+---------------------------+----------+----------+---------+--------+
| Total Wheat, including -  | 6665     | 6571     | 18699   | 2.81   |
+---------------------------+----------+----------+---------+--------+
| Winter Wheat              | 6185     | 6105     | 17683   | 2.86   |
+---------------------------+----------+----------+---------+--------+
| Spring Wheat              | 480      | 466      | 1016    | 2.12   |
+---------------------------+----------+----------+---------+--------+
| Total Rye, including -    | 624      | 609      | 1054    | 1.69   |
+---------------------------+----------+----------+---------+--------+
| Winter Rye                | 622      | 608      | 1053    | 1.69   |
+---------------------------+----------+----------+---------+--------+
| Spring Rye                | 1        | 1        | 2       | 1.47   |
+---------------------------+----------+----------+---------+--------+
| Total Barley, including - | 4500     | 4350     | 8975    | 1.99   |
+---------------------------+----------+----------+---------+--------+
| Winter Barley             | 482      | 474      | 1008    | 2.09   |
+---------------------------+----------+----------+---------+--------+
| Spring Barley             | 4018     | 3876     | 7967    | 1.98   |
+---------------------------+----------+----------+---------+--------+
| Corn for Grain            | 1711     | 1660     | 7167    | 4.19   |
+---------------------------+----------+----------+---------+--------+
| Oats                      | 468      | 450      | 791     | 1.69   |
+---------------------------+----------+----------+---------+--------+
| Mixed grains              | 6        | 6        | 10      | 1.57   |
+---------------------------+----------+----------+---------+--------+
| Millet                    | 141      | 120      | 141     | 1.00   |
+---------------------------+----------+----------+---------+--------+
| Buckwheat                 | 426      | 396      | 275     | 0.65   |
+---------------------------+----------+----------+---------+--------+
| Rice                      | 21       | 21       | 93      | 4.34   |
+---------------------------+----------+----------+---------+--------+
| Peas                      | 326      | 311      | 616     | 1.89   |
+---------------------------+----------+----------+---------+--------+
| Beans                     | 26       | 27       | 40      | 1.56   |
+---------------------------+----------+----------+---------+--------+
| Sorghum                   | 23       | 20       | 54      | 2.35   |
+---------------------------+----------+----------+---------+--------+
| ######                    | *        | *        | **      | **     |
| # Total Grains and Pulses | *15005** | *14605** | 38016** | 2.53** |
+---------------------------+----------+----------+---------+--------+

\**Source: State Statistics Committee of Ukraine*

# 

## Distribution of Wheat Stocks in Ukraine by Quality, 1,000 MT, %

  --------------------- -------------- ------------ -------------- ------------ -------------- ------------
  Wheat Class           **1-Jan-06**   **%**        **1-Feb-06**   **%**        **1-Mar-06**   **%**

  Soft Wheat 2nd Class  26             0.4%         21             0.4%         17             0.4%

  Soft Wheat 3rd Class  1,589          26.4%        1,502          27.0%        1,366          28.4%

  Soft Wheat 4th Class  2,018          33.6%        1,882          33.9%        1,637          34.1%

  Soft Wheat 5th Class  557            9.3%         516            9.3%         414            8.6%

  Soft Wheat 6th Class  1,758          29.2%        1,575          28.3%        1,317          27.4%

  Soft Wheat Non        18             0.3%         15             0.3%         11             0.2%
  classified                                                                                   

  Hard Wheat -- total   46             0.8%         46             0.8%         41             0.9%

  **Total Wheat         **6,012**      **100.0%**   **5,557**      **100.0%**   **4,804**      **100.0%**
  Stocks**                                                                                     
  --------------------- -------------- ------------ -------------- ------------ -------------- ------------

Data Source: Ministry of Agricultural Policy of Ukraine

## Soft Wheat Quality Requirements (Per State Standard of Ukraine DSTU 3768)

+------------------------+-------+-----+-----+-----+-------+--------+
| ###### M               | **Cl  |     |     |     |       |        |
| ain quality indicators | ass** |     |     |     |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
|                        | **1** | **  | **  | **  | **5** | **6**  |
|                        |       | 2** | 3** | 4** |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| Weight gram per 1      | 760   | 755 | 730 | 710 | 710   | Not    |
| liter                  |       |     |     |     |       | l      |
|                        |       |     |     |     |       | imited |
+------------------------+-------+-----+-----+-----+-------+--------+
| Moisture, %            | 14,5  | 1   | 1   | 1   | 14,5  | 14,5   |
|                        |       | 4,5 | 4,5 | 4,5 |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| Grain admixture, no \> | 5,0   | 5,0 | 8,0 | 1   | 15,0  | 15,0   |
| than, %                |       |     |     | 0,0 |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| Mineral admix. (sand,  | 0,3   | 0,3 | 0,5 | 1,0 | 1,0   | 1,0    |
| soil, etc)             |       |     |     |     |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| Protein, DM basis, no  | 14,0  | 1   | 1   | 1   | 10,0  | Not    |
| \< than, %             |       | 3,0 | 2,0 | 1,0 |       | l      |
|                        |       |     |     |     |       | imited |
+------------------------+-------+-----+-----+-----+-------+--------+
| Raw gluten, no \<      | 30    | 27  | 23  | 18  | 18    |        |
| than, %                |       |     |     |     |       |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| IDK                    | 45-75 | 45- | 45- | 20- | 2     |        |
|                        |       | 100 | 100 | 100 | 0-100 |        |
+------------------------+-------+-----+-----+-----+-------+--------+
| Falling number, sec.   | \>    | \>  | \>  | \>  | no \< |        |
|                        | 200   | 200 | 150 | 100 | 100   |        |
+------------------------+-------+-----+-----+-----+-------+--------+