Poland, Ukraine reach agreement to allow transit of Ukrainian grain

Poland and Ukraine have agreed to allow the transit of Ukrainian grain through Poland, according to an official statement from the Ukrainian agriculture ministry.

"Ukraine and Poland have reached the agreement to resume the transit of Ukrainian agricultural products. It will start operating on the night of April 20-21, 2023," the statement said.

Additional control measures will be applied to transit, and in the near future, they will be publicly communicated to market players.

Recently, Poland and Hungary banned(opens in a new tab) grains imports from Ukraine over the weekend, and Slovakia followed with restrictions on April 17.

After Russia's invasion of Ukraine last year, some Black Sea ports were blocked and Ukrainian grain -- which is significantly cheaper than that produced in the EU -- ended up staying in Central Europe mainly because of logistical bottlenecks, trade sources said. The resulting glut and price crash have hit local farmers hard, they said.

Apart from these three countries, Romania and Moldova are also looking at ways to stem the inflow of Ukrainian grains.

A European Commission spokesperson had said such a trade policy was a matter of "EU exclusive competence, and only the bloc could adopt legally binding decisions. Unilateral actions are not acceptable."

Future of trade deal under doubt

Any stoppage of trade flows due to the restrictions by EU nations would create a supply glut in Ukraine.

After Russia last week raised doubts about the future of the Black Sea grains deal, Ukraine also expressed concerns that the UN-brokered initiative was in danger of being shut down, alleging that Russia had been blocking ship inspections.

After Russia invaded Ukraine on Feb. 24, 2022, and blockaded Ukrainian Black Sea ports, a deal -- brokered by the UN and Turkey last July -- allowed Ukraine access to three ports.

Ukraine, the UN and Turkey agreed March 18 to extend the deal for another 120 days. However, Russia said the deal may not be extended beyond May 18.

Russian Foreign Minister Sergei Lavrov is expected to discuss the Black Sea grain deal with UN Secretary-General Antonio Guterres in New York next week, just weeks before the pact could expire unless Russian demands regarding its own exports are met.

Earlier the Russian foreign ministry said that unless five "systemic" issues were resolved, the grain deal may not be extended beyond May 18.

On April 13, Russia's foreign ministry said it wanted to reconnect its Rosselkhozbank (Russian Agricultural Bank) to the SWIFT international payment gateway, and resume supplies of agricultural machinery, spare parts and maintenance service to the country.

Russia also wants the lifting of restrictions on insurance and reinsurance for ships and cargoes, and guarantees of access to its Black Sea ports. It also wants the Tolyatti-Odessa ammonia pipeline restored and the unblocking of foreign assets and accounts of Russian companies related to the production and transportation of food and fertilizers.

The US Department of Agriculture has estimated Ukrainian wheat exports at 14.5 million mt in the marketing year 2022-23, against 18.84 million mt the previous season. S&P Global Commodity Insights has forecast Ukraine's wheat exports for MY 2022-23 at 15 million mt.

The USDA has estimated Ukraine's corn exports at 25.5 million mt for MY 2022-23, against 26.98 million mt for MY 2021-22.

Platts, part of S&P Global, assessed Ukrainian 11.5% FOB wheat at $260/mt April 18, unchanged on the day. Platts assessed Ukrainian corn FOB at $224/mt, also unchanged.