Ukraine's grains exporters monitor Russia's planned naval exercises

Corn exporters from Ukraine may be forced to consider changes to their shipping routes due to Russia's plans for naval exercises from Feb. 13-19, amid fears of a blockade that could impede the country's 33.5 million mt in exports of the feed grain this marketing year (July 2021-June 2022).

Ukraine is one of the world' largest grain exporters, representing 16% of this year's total global corn exports and 12% of wheat, mostly through its Black Sea ports. The price of US corn futures rose sharply in the second half of January, when market commentators pointed to the accumulation of Russian troops on Ukraine's border and the threat of a disruption to trade. However, at that time many of those working directly on the Black Sea market said that their businesses were operating as normal.

Ukraine's Foreign Ministry published a statement Feb. 10 accusing Russia of blocking "parts of the Black Sea and the Sea of Azov and the Kerch Strait under the pretext of holding regular naval exercises".

Maps that were published online and attributed to the Ukrainian Navy showed Russian naval exercises planned in the zones through which ships would typically pass after loading wheat and corn from Ukraine's Panamax ports of Odessa, Pivdennyi and Chornomorsk.

"The port administrations are studying routes to get around [the exercises]," said one participant in the Ukraine grains market, who described the naval exercises as a concern but added that "the degree wasn't clear yet".

The same maps also showed the Kerch straight blocked as a result of the operations, which would bar Ukrainian ships from leaving the shallow water ports of Mariupol and Berdyansk in the Sea of Azov. The coasters that sail from those ports represent a small share of Ukraine's total grains shipments but sellers in the last week have cut their offer prices sharply, prompting one trader to talk of a "distressed market.. excess stocks and panic sales."

"Issues are complicated, we should wait and see whether there will be applications from Ukraine sellers for force majeure," one participant in that shallow-water market said Feb. 10, after the details of Russia's naval exercises were reported.