The Ministry of Agrarian Policy of Ukraine is planning to introduce a mechanism of minimum export prices for a number of agricultural products, including grain, oilseeds and sunflower oil. During the online meeting of Trend & Hedge Club on 19 Jun, the representative of the Ministry Mykhailo Sokolov explained how the minimum price would be calculated and what effect this mechanism would have on the market.

According to the expert, official customs data for the previous month will be used to calculate the minimum price. "We use the 5% percentile method. That is, we take 5% of all contracts that were concluded at the lowest prices and calculate the average price from them. And the obtained result is additionally discounted by 10%. Thus, this minimum calculated price will be lower than the weighted average price," M. Sokolov explained.

He also noted that the number of deals concluded at prices lower than the calculated minimum price would be very small. "Such agreements are either a really special case or some kind of scam," the expert noted. 

Regarding the forward contracts, he noted: "The minimum price at the time of concluding the forward contract will be applied. I hope that there will be no problems, because the calculated prices will be low and the contracts will be easily fulfilled."

Minimum export prices will begin to be calculated from the moment of approval of the relevant resolution by the Cabinet of Ministers of Ukraine.