OREANDA-NEWS. On 19 August 2008 was announced, that Credit-Rating believes that the decline in grain prices occurred in July-August 2008 was of temporary nature. This plunge was prompted by a number of factors, to name a few large amount of grain stocked (including that obtained from export restrictions during 2007/2008 marketing year), expectation of vast crops in 2008 and lack of working assets for harvest campaign coupled with rise in value of loans. The change in USD/UAH rate played an important role in this process too, which made the exporters lower the purchase prices in order to retain profitability.

According to Ekaterina Vasina, head for Credit-Rating`s agricultural sector, the present price environment is temporary and is likely to change by 2008-end. The prices will be bolstered by a number of factors, namely development of biofuel segment and, consequently, the utilization of grain for technical purposes, or reorientation to growing oil-yielding crops, rise in consumption by Asian countries accompanied by low global reserves.

In the view of the agency`s analysts the primary cost of grain production in Ukraine is hardly compensated at the present price level. The further growth in prices for mineral fertilizers and fuel will also underpin rise in grain prices in the domestic market.

Credit-Rating subscribes to the opinion that the positive financial performance of the companies engaged with growing and trade with grain in 2007/2008 marketing year was underpinned mainly with favorable environment in the grain market in 2007/2008. Still, despite the existing negative price trends in the sector, the agency does not plan revision of credit rating assigned to companies operating in this segment, and expects adjustment of prices which is to occur upon harvest campaign and clarification in the state policy regarding export of grains.