Ukraine Grain Shipments Slow as Export Deal With Russia Nears End

Grain exports from Ukraine have slowed markedly in recent weeks, pushing up global prices, amid shipping delays and concerns about the looming expiration of a United Nations-backed deal to give food cargoes safe passage.

Russia’s invasion of Ukraine last year had initially trapped shipments of wheat, sunflower oil and other agricultural products, sparking concerns of a global food crisis. Shipments then recovered later in the year to near prewar levels after Moscow and Kyiv agreed to a U.N.-backed pact to resume food exports via Black Sea ports.

Now, with tensions high ahead of the first anniversary of the invasion, some traders are worried Russia won’t extend the grain deal, which is due to expire on March 19.

Around 3 million tons of grains and oilseeds were shipped out of Ukraine last month, according to the U.N. Black Sea Grain Initiative vessel tracker, down from the 3.7 million tons shipped in December. So far this month, about 1.5 million tons had shipped by Feb. 20, the U.N. data shows, of the 2.8 million tons scheduled.

Wheat prices have risen about 10% over the past month, edging toward $8 a bushel. This level, though, remains well below the post-invasion high of $12.94 a bushel last March.

Exports from Ukraine do traditionally fall after January as stocks from harvests dwindle, however, given the backlog caused by the war, the drop in shipments has been more than analysts expected.

The Ukrainian Grain Association last week said that the number of ships waiting for inspection had now risen to more than 140, up from fewer than 100 ships at the start of the year. It said Russia had deliberately delayed ship inspections to destabilize supplies, turning food into a weapon.

Russia didn’t immediately respond to a request for comment. Russia’s foreign ministry has previously said the country’s representatives have acted in compliance with the export pact and blamed Ukraine for an accumulation of ships.

A U.N. spokeswoman said the organization was working actively with all parties to have the deal renewed.

The looming expiration of the grain deal means “there is now really some uncertainty [for exporters],” said Sergey Feofilov, founder of UkrAgroConsult, a Black Sea agri market analysis firm.

Mr. Feofilov added that the uncertainty was compounded by inspection delays, with exporters and traders now working to a 3-4 week planning schedule to get out of the Black Sea rather than the previous one-week time frame.

Greater difficulty and higher risk of shipping grain out of Ukraine has made some traders reluctant to do business, analysts and traders said.

Worries about orders not being fulfilled has diminished the appeal of Ukrainian wheat to buyers in the Middle East and North Africa, analysts said.

As exporters look to mitigate the risks associated with Ukrainian shipments, local farmers have received lower prices for their wheat, according to Mr. Feofilov. Ukrainian wheat prices last week stood at $272.50 a ton, while Russian wheat was assessed at $299.50 a ton, according to data from Argus.

Mr. Feofilov said the lower prices have made some farmers reluctant to plant winter crops, lowering the outlook for next year’s harvest.

Tags: Ukraine, UkrAgroConsult, export, grain, prices, Black Sea region, wheat, sown area, war