Black Sea Watch: Ukrainian grain flows see strong start to February

Ukrainian seaborne flows have been strong in February with the daily average flow just above 155,000 mt, according to data from UN's Joint Coordination Centre, with little more than a month left until the next renewal date for the Black Sea Grain Initiative.

"We fixed $26/mt for a 72,000-75000 mt intake of cargo to Tarragona, now trying [again] to find a Panamax or Kamsarmax vessel," said a shipbroker, with the previous operator failing to nominate a proper vessel.

"They gave us an unnamed ship able to lift 66,500 mt only, split as 38,500 mt of bulk wheat and 27,900 mt of corn, which is less than our sales contract and the charterers declined her."

The UN-brokered Black Sea Grain Initiative -- first signed last July by Russia, Ukraine and Turkey and renewed in November for four months from Nov. 19 -- enabled the resumption of exports of grains and other foodstuffs from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative flows reaching above 21 million mt as of Feb. 13.

February's daily average seaborne flows have been trending at 155,400 mt/d so far, marking the highest level observed for any month since the inception of the safe passage deal, JCC data showed.

In addition, export levels over Feb. 6-12 rose 17% from the previous week to reach 1,137,270 mt, the third highest level since shipments restarted in August, according to JCC data, and despite recent unfavorable weather in the region.

In terms of cargoes, corn accounted for 59% of the volume during Feb. 6-12, from 53% the week prior, with the share of wheat retreating to 28% from 35%, data from the JCC showed, with the rest of the cargoes consisting of barley and sunflower products.

High-income destinations attracted 39% of the Feb. 6-12 exports, compared to 36% during the previous week, with upper-middle-income markets claiming 43% of the volumes, down from 50%, with the remaining cargoes headed to lower-middle-income countries, according to JCC data.

As for the geographical distribution, Europe and Central Asia region remained the top buyers of seaborne Ukrainian grains in the week to Feb. 12, claiming over 59% of the flows, compared to 43% the previous week, with the East Asia and Pacific region's share nearly halving to 23% from 43%.

The largest shipment observed was 70,400 mt cargo of corn on the Eternal, which departed Odesa Feb. 6 and was reported to be heading to China.

The strong flows observed during early February have come on the back of a particularly weak export performance during January, which saw the three key Ukrainian ports releasing 3 million mt of grains, the lowest level since August, the first month of the agreement, and November, the month of the first renewal deadline.

"In January, the [world] received a quarter fewer Ukrainian agricultural products than in December. The main obstacle to access of [Ukrainian] grains to [global] markets is Russia deliberately slowing down the inspection of vessels in the Bosporus," the Ministry of Infrastructure said earlier in February.

Safe passage deadline approaching

The Black Sea Grain Initiative agreement says it will "be extended automatically for the same period [120 days], unless one of the parties notifies the other of the intent to terminate the initiative, or to modify it."

So, market participants remained cautious with the mid-March renewal deadline approaching.

"It is almost not safe to fix already. I am waiting for trade to stop in a week or two," a charterer said, with the average waiting time still said to be close to five weeks. "I have three ships waiting since December which likely will pass inspection after mid-February ... what if the corridor is not prolonged?"

"I believe that all the deals [done] now, they will have a cancellation clause," a second charterer said. "This is in case there is official news that the deal is not going through. My last [Handysize] ship which passed commission waited for 45-plus days and we have 39 ships remaining."