Wheat Prices Could Soar if EU Approves Ukraine Loan

Business | March 7, 2014, Friday // 12:27|  views

Photo by BGNES

Ukraine's wheat production, which is the 11th largest in the world, may suffer due to the EUR 11 B aid from the EU.

The reason is that the money will come with strings attached, such as drastically raising electricity and fuel prices in the country, as Bulgarian website Expert.bg has warned.

Another requirement will be to scrap the ban on land sales to foreigners, according to Bulgarian analyst Simeon Elazarov from the Sofia Stock Exchange. This will lead to wheat's prime cost going up and, therefore, increase its added value.

Eleazarov believes that, on the other hand, the developments in Ukraine might have a positive role for Bulgaria's wheat exporters, who are rivaled mainly by Ukrainian producers.

Wheat, like other commodities, is mostly transported by sea, and traders will stop at whichever port city offers the best prices.

Experts think that if Ukraine signs an agreement with EU and the IMF over the loan, all goods made by the country will inevitably become more expensive, thus benefiting Bulgarian ports.

Estimates quoted by British newspaper The Guardian show that the global price for wheat has already increased by 5.9% to USD 6.38 a bushel in response to the crisis shaking the country.

The same goes for corn, which on Monday rose up by 3.7% to USD 4.81.

This could be partially explained with farmers holding back grain as a protection against the falling currency.

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Tags: wheat, Ukraine, EU, IMF, loan, Sofia Stock Exchange

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