Russia's greater risks push wheat exporters to favor smaller parcels

Russia is set to ship a larger share of its grains in small cargoes in March, traders said, reflecting the growing difficulty of arranging insurance and shipping from the world's largest wheat exporter following the country's invasion of Ukraine.

Russian provided just under a fifth of the 195 million mt that was imported globally in the 2021-22 marketing year (July-June). Before Feb. 24, observers had expected the country to ship at least 2 million mt of wheat in March, mostly in of shipments of 20,000 mt or more.

Traders have said that many international owners of larger vessels were unwilling to load cargoes from Russia, while the fleet of Russian-owned bulk carriers is insufficient to fill the gap. Russia only has around 30 bulk carriers of more than 20,000 mt capacity, one shipping source said.

The March 17 line-up from the three export terminals in Novorossiisk, Russia's main deep water port in the Black Sea, showed 38 parcels due to load from March 3-24, half of which were smaller than 10,000 mt.

For comparison, the 21 parcels from a lineup for early February did not include a single cargo of less than 10,000 mt.

"Buyers can only be creative," said one market participant, who added that multinationals and those that relied on Swiss banks were now out of the market. "Russian [sellers] are happy to do whatever they can. If not by Panamax or Handysize, then by coaster, train or truck."

"There is no more market for large cargoes," another market participant said, pointing to the lack of any bids for Handysize or Panamax cargoes on an FOB basis from Russia.

However, the number of coasters loading from Novorossiisk was also a direct result of port closures in the Azov Sea, where coasters loaded from both Ukraine and Russia before the war. One shipping broker in Russia said that all of Russia's Azov Sea terminals were now operating normally.

Shortly after Russia invaded Ukraine, one Turkish-based trader said CIF sellers on the Russian coasters market had been trying to declare force majeure given that the Azov Sea ports were closed. However, their buyers had rejected the request and demanded the counterparties load from Novorossiisk.

The number of coasters needing to load from Novorossiisk has also created congestion -- more than a third of ships are marked as anchored.