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Grain agreement to unlock 65% of Ukraine grain export capacityGrain agreement to unlock 65% of Ukraine grain export capacity

A deal between Russia and Ukraine to allow the safe export of grain stranded by the war could reopen 65% of Ukraine's grain export capacity.

Gary Howard, Middle East correspondent

July 27, 2022

2 Min Read
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Signed on 22 July, the 120-day deal allows for the export of grain from western Ukraine ports Yuzhne, Chornomorsk, and Odesa, ports which accounted for 65% of Ukraine’s total grain exports over the past five years, according to Bimco.

While the ports historically account for almost two-thirds of grain exports, volume will undoubtedly be limited by various impacts of Russia's invasion of Ukraine.

“With this deal, the UN hopes to increase monthly grain exports from Ukraine by five million tonnes. However, since over the past five years, these three ports have not ever handled such a high amount of grain, meeting this target could prove to be a challenge,” said Niels Rasmussen, Chief Shipping Analyst at Bimco.

“Even if port logistics accelerate to expedite exports, the need to escort ships in and out of the ports is likely to cause some congestion.” 

There are also questions over whether seafarers, operators, ship owners, and insurers will be willing and able to work in the region.

Ukraine is a significant producer of grains and oilseeds, with arable land accounting for around 55% of its land area according to the US Department for Agriculture (USDA) and agriculture accounting for 41% of Ukraine’s total exports by value in 2021.

Some 22m tonnes of grain are stranded in Ukraine ready for export, and a further epxort surplus of 25m tonnes is expected from the 2022 harvest. There is an urgent need to move grain; with the wheat harvest underway and corn harvest to follow in September, stored grain needs to be exported swiftly to make room for the new crop.

Related:Updated: Security and insurance concerns hang over Ukraine grain export recovery

“A significant obstacle to Ukrainian grain exports will be the voyage risk and corresponding insurance premiums. For the shipping of Ukrainian grain to be attractive, high rates will be necessary to mitigate risk-related expenses,” said Rasmussen. “Russia’s recent missile strikes in ports such as Odesa will add to the insecurity and uncertainty of operating in the Black Sea.” 

The impact of the war in Ukraine has hit production for key agricultural exports. Usually the world’s largest producer and exporter of sunflower meal and oil, Ukraine’s sunflower meal exports are forecast to fall from almost 66% of global exports to 40%, and sunflower oil exports are forecast down from almost half of global exports to 35%.

USDA forecast Ukraine wheat exports down almost 50% in the 2022/23 season.

“Due to limited global supply of wheat and maize, a return of Ukrainian grain to the global market would positively impact the Panamax, Supramax and Handysize segments. Additionally, the boost in Ukrainian exports would help combat inflation and food insecurity, particularly in emerging economies, and help bring needed stability to the global economy,” said Bimco.

Related:Deal to lift Ukraine grain blockade could be signed today

About the Author

Gary Howard

Middle East correspondent

Gary Howard is the Middle East Correspondent for Seatrade Maritime News and has written for Seatrade Cruise, Seatrade Maritime Review and was News Editor at Lloyd’s List. Gary’s maritime career started after catching the shipping bug during a research assignment for the offshore industry. Working out of Seatrade's head office in the UK, he also produces and contributes to conference programmes for Seatrade events including CMA Shipping, Seatrade Maritime Logistics Middle East and Marintec. 

Gary’s favourite topics within the maritime industry are decarbonisation and wind-assisted propulsion; he particularly enjoys reporting from industry events.

Conferences & Webinars

Gary Howard regularly moderates at international maritime events. Below you’ll find a list of selected past conferences and webinars.

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