UGA to present Bank Guarantee in Geneva for the Head Offices of international grain traders

On January 27, 2022, the Ukrainian Grain Association will present the Bank Guarantee Mechanism for Forward Grain Contracts in Geneva for the Head Offices of international trading companies, grain market participants, and banking institutions.

Mykola Gorbachov, President of the Ukrainian Grain Association, will present the Bank Guarantee Mechanism in Geneva. Also, Deputy Minister of Economy Taras Kachka, a representative of the EBRD, and representatives of commercial banks that participated in the development of this instrument will comment on the support of the new tool for the grain market.

Bank Guarantee for Forward Contract for price growth as a tool is designed to eliminate the risks for the buyer of grain in case of default on the forward contract and paying him the price difference between the price of the forward contract and the market price so that the buyer can enter the market and buy the required volume grains.

Grain producers, especially small and medium-sized ones, are becoming as reliable suppliers as, for example, agricultural holdings, and will receive a higher price for their products paid to reliable suppliers. Manufacturers will get a higher price of about $ 5-7 / t, and the cost of a bank guarantee will be only $ 1 / t.

Mykola Gorbachov, President of UGA, is convinced that all participants in the Ukrainian grain market will benefit from the introduction of the Bank Guarantee Mechanism for Forward Contracts, and the Ukrainian grain market will turn into a premium one. “This is an absolute ” win-win ” strategy for the entire agricultural sector of Ukraine,” said Mykola Gorbachov.

According to the President of UGA, the introduction of the Bank Guarantee for grain forward contracts will make every producer, including small and medium, a reliable supplier. Due to this, Ukraine will get a better price for its grain on the world market by reducing the risk of default on forward contracts. Today, the price of Ukrainian grain is about $ 7-10 lower than from more developed Black Sea countries.