After Novorossiysk shutdown, risks to Russian grain exports are shifting to the Baltic

Problems affecting Russian grain exports, which in recent weeks have been concentrated in the Azov-Black Sea basin, are beginning to spread to the Baltic route. Grain operations at the port of Ust-Luga are continuing following the August 14 attack, but market participants are increasingly concerned that further incidents could prompt restrictions from shipowners and insurers.

Risks to the Baltic route are emerging just as Russia’s ability to export grain through its southern ports has sharply declined. According to SovEcon, more than 95% of Russia’s grain export capacity in the Azov-Black Sea basin was offline as of August 13. Navigation in the Azov region has been suspended since July, the Taman terminal has been out of operation since late July, while the main grain terminals in Novorossiysk were halted following attacks.

Fastmarkets data highlight the scale of Russia’s dependence on Novorossiysk. In the week ending August 14, Russia exported 484.8 thsd tons of milling wheat, of which 422.1 thsd tons, or around 87%, were loaded at Novorossiysk. The 26% weekly increase largely reflected cargoes shipped before terminal operations were suspended, meaning the impact of the disruption could become much more visible in the coming weeks.

Under these circumstances, Baltic ports could potentially absorb some of the cargo flows that can no longer move through Russia’s southern ports. However, following the attack on Ust-Luga, the market has begun to factor in risks to this route as well. Further attacks could prompt shipowners and insurers to restrict vessel calls at the port, further narrowing Russia’s available grain export channels.

Even before the latest attacks, Russia’s August wheat exports were forecast at only 2.7–3.1 mln tons, compared with 4.5 mln tons a year earlier, a decline of 31–40%. This could be the lowest August volume since the 2016/17 season, while a prolonged Novorossiysk shutdown and growing risks in the Baltic pose an additional threat to shipments in the coming months.

Tags: Russia, export, grain, Black Sea region, ports, restrictions, war