News

  • Main
  • News
  • 100 KMT of grain and vegoils/meals will be shipped in conditions of limited access to the Black Sea

100 KMT of grain and vegoils/meals will be shipped in conditions of limited access to the Black Sea

11 February, 2022 at 10:02

Russia has announced blocking parts of the Black Sea for the time of naval exercises on February 13-19. Two sections of the Black Sea may be blocked. These naval exercises cannot but affect Ukraine’s agricultural exports, as the Black and Azov Sea ports account for more than 80% of their total volume. Therefore, any export delays will affect both Ukrainian and international markets.

Impact on contract execution.

The deep-water ports will be accessible through a remaining corridor at least 12 nautical miles wide. The corridor’s sea depths are navigable for ships not larger than the Handy class. According to the line-up, the arrival of six ships is expected in the exercise period (82 KMT of grains, 30 KMT of meal and 16 KMT of vegoil), with just one of them being a 50 KMT capacity vessel. Thus, the intended grain volume is going to be shipped abroad entirely.  

Impact on prices.

Wheat and corn futures prices are on the rise. The spot market has frozen, waiting for the situation to clear up.  

Impact on the freight market.  

Some shipowners may refuse to enter the risk area, and freight rates and insurance premiums are likely to grow. 

The above processes could seriously affect the competitiveness of Ukrainian grain exports due to increased demurrage risks and higher maritime logistics costs. In addition, this increases pressure on domestic grain and oilseed prices within the framework of grain origination. 

Hopefully, this is just another information injection that will not have negative consequences for Ukrainian exports. After all, this is not the first such exercise