Ukraine to Introduce Mechanism for Minimum Export Prices on Grain, Oilseeds, and Sunflower Oil

The Ministry of Agrarian Policy of Ukraine plans to implement a mechanism for minimum export prices on various agricultural products, including grain, oilseeds, and sunflower oil. During an online meeting of the Trend&Hedge Club on June 19, a representative from the ministry, Mykhailo Sokolov, explained how the minimum price will be calculated and its potential impact on the market.

According to Sokolov, the calculation of the minimum price will be based on official customs data from the previous month. "We use the 5th procentile method. This means we take 5% of all contracts that were concluded at the lowest prices and calculate the average price from them. The resulting figure is then further discounted by 10%. Thus, this calculated minimum price will be below the weighted average price," Sokolov explained.

He also mentioned that the number of deals concluded at prices below the calculated minimum price would be very small. "Such agreements are either genuinely exceptional cases or some sort of scam," the expert noted.

Regarding forward contracts, he added, "The minimum price at the time of signing the forward contract will be applied. I hope there will be no issues because the calculated prices will be low, and contracts will be easily fulfilled."

The calculation of minimum export prices will commence once the relevant decree is approved by the Cabinet of Ministers of Ukraine.