Grain prices approach three-year high amid Black Sea export disruptions

Global grain prices have surged to near three-year highs as escalating attacks disrupt port infrastructure and shipping in Ukraine and Russia, the Financial Times reports. Markets are increasingly pricing in the risk of prolonged supply disruptions from the region. Analysts say the impact on the wheat market could be more severe than the disruption in the Strait of Hormuz was for crude oil.

The decline in shipments is already significant. Ukraine’s grain exports in August are down about 75% year-on-year amid disruptions to Black Sea port operations. The situation is particularly important for Ukraine, where agriculture accounts for around 60% of export revenues.

Russian shipments are also falling sharply. SovEcon expects Russia to export about 2.2 mln tons of grain in August, down from around 4.6 mln tons a year earlier, with most available shipments moving through routes outside the Azov and Black Sea basin.

Oxford Economics estimates that disruptions could put up to 86 mln tons of grain exports from the two countries at risk, including 52 mln tons from Russia and 34 mln tons from Ukraine. Replacement capacity is limited: alternative Ukrainian routes by rail and the Danube could handle only around 17 mln tons even if additional capacity becomes available.

Further price moves will largely depend on how long Black Sea disruptions persist. If port logistics remain constrained, the global market could face a prolonged reduction in export supply just as the new crop enters its peak shipping period.

Tags: Ukraine, Russia, export, grain, prices, wheat, restrictions