“Grain Corridor:” scenarios, assessments, expectations

Source:  UkrAgroConsult
Author:  Maksym Kharchenko
фрахт коридор

Article author:

Maksym Kharchenko
Freight Market Analyst

The short-term refusal of Russia to participate in the “grain deal” once again made us think about the prospects of agricultural exports from Ukraine. The above-mentioned practice shows that the deal may be terminated at any moment, which suggests us to consider two scenarios for further exports – optimistic and pessimistic ones.

Optimistic scenario: the “grain deal” will be extended each time after the expiration of 120 days

  1. How will this affect prices?

The deal’s extension will push up demand from major importers and consequently lead to stronger domestic demand from Ukrainian exporters. So, domestic prices will likely grow.

Increasing supply from Ukraine will pull down global prices.

However, it nevertheless should be kept in mind that importers will likely wait for a certain period after the beginning of the “grain deal’s” new term, though this period will not be as long as it was in August.

  1. How will this affect exports?

The temporary absence of Russia’s representatives during the inspections showed that these inspections can be accelerated. This suggests that the rate of port capacity utilization could be raised. Provided the “grain corridor” continues to operate successfully and in case of further gradual liberation of Kherson region, Mykolaiv and Ochakiv could be added to the list of the ports operating under the deal.

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