Ukraine is impose a cap on wheat and barley exports until the end of the year due a severe drought, officials said on Tuesday, after a full ban by Russia triggered concern on global grain supplies.

Ukraine will export a maximum of 3.5 million tonnes of wheat and barely until the end of the calendar year, the agriculture ministry said, barely half of what it exported last year in the same season.

"We are proposing to allow the export of 2.5 million tonnes from now until the end of the year," said Agricultural Policy Minister Mykola Prysyazhnyuk, adding that one million tonnes currently held in ports would also be exported.

He said that the issue would be discussed at a cabinet meeting on Wednesday, the Interfax-Ukraine news agency reported. The quota would come into force on September 1, he added.

Ukraine, the world's sixth largest exporter of wheat and largest exporter of barley, has been suffering the effects of a severe drought that prompted its neighbour Russia to impose a blanket export ban.

In the last agricultural year running July 2009 to June 2010, Ukraine exported more than 21 million tonnes of grain. This comprised 9.1 million tonnes of wheat, 6.2 million tonnes of barley and 5.3 million tonnes of maize.

Under the quota, Ukraine would export only 1.5 million tonnes of wheat and one million tonnes of barely until the end of the calender year. Maize is exempt from the quota.

In the marketing year from July 1, Ukraine has so far exported 2.69 million tonnes of grain.

Russia, the world's number three wheat exporter last year, on Sunday implemented a full ban on grain exports ordered by Prime Minister Vladimir Putin.

The ban is aimed at keeping the Russian domestic market well supplied with grain to prevent sharp rises in prices.

The move by such a key global player stung world wheat markets, sending prices to two-year highs and sparking worries of a crisis in global food supplies.

Putin has shrugged off the controversy, warning that the ban could even be extended. "There is no need to count on a quick removal of the export ban," he said, adding that anyone waiting for December 31 was doing so "in vain".

There has been criticism of the ban even within Russia, with some players saying it will take the country years to regain its international market position and risks driving domestic grain producers out of business.

An EU spokesman said on Tuesday that the European Union has plenty of grain in stock and will not suffer from Russia's decision to ban exports.

Wheat prices have been supported over the past days by speculation that Ukraine was going to impose export limits and also uncertainty over whether Russia's customs union partner Kazakhstan would mimic its grain ban.

Ukraine is believed to have suffered less drastically than Russia because of the heatwave, with its harvest expected to drop to 40-43 million tonnes of grain from 46 million tonnes the year earlier.



AFP