Ukraine’s grain exports fell by a third after the failure to renew the agreement with Russia that established a safe corridor in the Black Sea, according to estimates by the consultancy UkrAgroConsult.
In the period between July 15 and August 15, Ukraine was only able to export 3.2 million tons of grains, vegetable oils and other foods, a drop from 4.8 million tons in June and the 4, 4 million in May, when the agreement was still in force.
The loss of exports represents a blow to Ukraine’s finances and the global price of these commodities.
Both the United States and the European Union (EU) are collaborating to find and finance viable alternative routes for the export of grains, through rivers such as the Danube, or even by land, in trucks and trains.
In any case, the governments aim to prioritize river transport, since the rest would make Ukrainian grains less competitive in the world market due to the costs and investments that would be required.
The Danube, however, also presents its complications: cargo ships take up to four times longer to reach the river due to the volume of traffic, members of the Agribusiness Club of Ukraine told the Bloomberg news agency.
Not only are there delays, but the costs are higher and your security is not guaranteed: Russia began shelling the ports of Izmail and Reni this week.
Olena Vorona, chief operating officer of transporter Agrotrade Group, said her firm redirected flows to railways and Danube ports even before the grain deal was finalized, but costs are now 50% higher.
“In many regions, farmers will probably think about reducing their shipments of winter cereals (boreal), because the prices offered by the market do not cover the costs,” said the Agribusiness Club.
The Ukrainian train operator, meanwhile, reported that waiting times at border crossings demand between five and six days.
In the absence of drainage routes and a better-than-anticipated crop, Ukraine’s grain stocks are expected to continue to rise into next year; while exports -according to Oxford Economics- could fall by a quarter in the second half of the year compared to the first.
“This will represent a 3% drop in Ukraine’s Gross Domestic Product (GDP) in the second half of the year,” estimated Evghenia Sleptsova, economist at the firm.
On the other hand, Russia registers strong growth in its grain exports and, according to estimates, it is expected that it will represent a quarter of all world wheat exchange in the 2023-24 season.
Source: Ambito
