Rerouting Russian grain from the Black Sea to the Baltic adds up to $50/t in costs

Rerouting Russian grain exports from the Black Sea to the Baltic due to shipping disruptions and damage to port infrastructure is adding around $40–50/t to exporters’ costs. Against this backdrop, Russia’s grain exports in August could fall by more than half compared with last year.

According to ProZerno, 12.5% protein wheat at the Baltic port of Vysotsk is priced at $250–260/t FOB, compared with around $212/t FOB at Black Sea ports. The gap illustrates the additional costs involved in shifting export flows from southern Russia to the northwest.

Shipping costs are also rising on the traditional Black Sea route. Freight for 25,000-ton vessels carrying grain from the Black Sea to Egypt increased by $5/t in just one week to $40–45/t, further weakening the competitiveness of Russian grain in key export markets.

Using the Caspian route as an alternative to Black Sea exports is also becoming more expensive. According to market experts, freight rates from Astrakhan to Iran across the Caspian Sea have jumped by $20/t. This means that redirecting grain flows both to the Baltic and via the Caspian comes with significantly higher logistics costs.

Due to logistics constraints, estimates for Russia’s August grain exports have fallen to 1.8–2.5 mln tons, compared with more than 5 mln tons a year earlier. Rusagrotrans forecasts wheat exports at 1.8 mln tons, while the Russian Grain Union expects only 1.5–1.6 mln tons of wheat and total grain exports of 1.8–1.9 mln tons.

Russia cannot quickly compensate for disruptions to Black Sea exports through alternative routes. If Black Sea constraints persist, grain exports in September may also remain below 2.5 mln tons. With the new crop arriving and export demand remaining weak, the situation is adding further downward pressure on domestic grain prices.

Tags: Russia, export, Black Sea region, wheat, restrictions