The Ukranian government has said it will lift an export cap on wheat put in place after drought affected production in the country, a major Black Sea producer. The government had placed a 5.5 million tonne limit on exports in the wake of last year's drought.

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Ukrainian Agriculture Minister Mykola Prysyazhnyuk said the decision could be taken as early as this week to allow traders to sell 500,000 extra tonnes of wheat. The minister had delayed making a decision until this month in order to assess the country's winter wheat crop, which accounts for 95 percent of production.

Exporters and the government signed a memorandum last year acknowledging the cap, but including the condition that traders could shift more wheat if the current season's crop was successful.

The move was anticipated last week by Leonid Kozachenko, President of the Ukrainian Agrarian Confederation at a conference of Black Sea region exporters. He said then that, given the good condition of winter crops this year, Ukraine may export 500,000-800,000 more wheat.

However, in Monday's MARS bulletin, EU agricultural meteorologists said rainfall remains below the seasonal average in some parts of the Ukraine, whereas others have just exited a prolonged period of wet and cold weather, including heavy snowfall up until April.

MARS analysts said, "Due to the low temperatures, winter cereals remained in the dormant stage or showed minimal vegetative activity in the north-western half of Ukraine," though crops had fared better in the rest of the country.

Even so, Kozachenko said there are now no concerns about the shortage of wheat and anticipated the government honouring last year's deal, adding this would be a "big plus… Now we know that winter crops survived quite successfully."

The Ukranian government announcement this week increases competition for EU wheat. Wheat crops have struggled in many of the bloc's major producers due to the after-effects of bad weather in 2012, and a cold, slow start to spring this year.