The Black Sea grain corridor has been extended!

UkrAgroConsult

The grain deal has been extended! Like all citizens of Ukraine we were and we are optimists!

After long negotiations, the Russian side finally agreed to extend the grain corridor at the last minute.

1. Over the past almost 10 months, the corridor has become the main export outlet for Ukrainian grains with shipment of 30.2 M mt of agricultural products or 52% of the total exports.

2. The corridor slowly was coming to an end but the last-minute positive decision was reached. By 18th May all outbound vessels are likely to be inspected with their total number of only 12 vessels. However, still 46 vessels (2.8 M deadweight) waiting inbound, some fleet owners redirected their ships to other destinations. Waiting time varies from 41 up to 103 days.

The Russian side benefited from the termination or postponement of the corridor, weakening competition and gaining a larger share of the wheat market. Early February 2023, grains stocks were one and a half times higher than last year.

Exports blocking will bring long-term consequences for Ukraine, incl. drop in foreign exchange earnings and the risk of further production decline due to funding deficit.

However, UkrAgroConsult conclusion is the corridor extension for sure simplifies the grains exports, but in other way this is existing problems conservation. What does the conclusion mean:

1. the risk of untimely fulfillment of the contract due to queues for inspection, the use of various excuses to delay ships;

2. uncertainty about the next extension of the deal negatively affect the sale of the new harvest;

3. the new 60 days term will end just in the peaking harvest time of wheat, barley and other early crop, which will put additional pressure on domestic prices;

4. a very clear signal to the market – please develop alternatives both in logistics / supply chains and in new export destinations

Tags: grain, prices, wheat, Black Sea grain corridor, Ukraine, Russia, Turkey, export