KIEV, Ukraine (B)--Ukraine will soon start importing milling grain as shortages on the domestic market have already spurred grain prices almost 35% in US dollar terms in the course of the past three months, traders said Jan. 10.

Traders also warned that the government would soon have to resort to raising the price of bread, a product which is subsidized in Ukraine.

"Ukraine will start importing milling grain soon after domestic prices reach $117 to $120 per tonne, versus the current $105 per tonne at elevators," said Volodymyr Klimenko,

director of the Ukrainian Grain Association that unites major grain traders. Ukrainian grain prices have rise 35% in dollar terms in the past three months and 57% in local currency terms as a poor harvest produced grain shortages in some regions.

The government decided last month to allow the import of 1.5 million tonnes of milling grain free of any duty in the 1999-2000 season. The country's grain output is now estimated at about 24.0 million tonnes for the 1999-2000 season, down from 26.4 million tonnes the previous season.

Commodity traders forecast that the growth in grain prices will force the government to raise domestic bread prices.

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