Black Sea Attacks Cripple Grain Exports

Attacks on ports and shipping have shut down more than 97% of Russian and Ukrainian grain export capacity in the Azov and Black Sea region, cutting off a major source of low-cost supplies. Importers in the Middle East, Africa and Asia are increasingly facing the prospect of turning to higher-cost suppliers such as the US and Australia.

Global wheat prices have risen about 6.5% this month and are roughly 30% higher than a year ago. Ukraine’s Black Sea terminals are no longer shipping grain after the Odesa port hub effectively ceased operations at the end of July. The country is instead exporting through rail links with Eastern Europe and Danube river ports, which each account for about 45% of shipments, while the remaining 10% is transported by road. Ukraine expects to reach 50% of its export potential if the ports remain blocked.

In Russia, the only grain terminal not officially shut is a small facility in Tuapse. Major grain terminals in Novorossiysk have closed following a Ukrainian drone strike, while KSK – Russia’s largest grain terminal – has suspended grain deliveries and exports. Operations at the Taman grain terminal have also been halted.

Russian wheat exports in August are estimated at 1.8 million metric tons, the lowest level for the month since 2010. Russia can redirect some shipments through ports in the Baltic, Caspian and Far East, but the longer transport distances are expected to create logistical challenges and increase costs.

(Reuters, max)