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First wheat cargo sails from Ukraine's Chornomorsk port, Australian sellers unfazed

Highlights

MV Sormovskiy 121 sails from Chornomorsk port to Turkey: JCC

Ukrainian wheat offered to Asian CFR markets

Market players eager to see Panamax-size ships entering Black Sea

MV Sormovskiy 121 -- the first ship laden with wheat -- sailed from Ukraine's Chornomorsk port early Aug. 12 toward Turkey, a development market sources believe will likely impact Australian wheat prices if Ukrainian supplies grow stronger.

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The United Nations and Turkey brokered a deal in July to resume shipment of grains and oilseeds out of the Black Sea through a "humanitarian maritime corridor", via shipping lanes which had been halted for more than five months following Russia's invasion of Ukraine in February. The suspension was the main driver for the surge in global wheat and corn prices.

So far 14 ships, including MV Sormovskiy 121, have left Ukraine following the deal.

MV Sormovskiy 121 is the first to carry wheat out of the Ukraine's Black Sea port since the invasion. It was loaded with 3,050 mt of wheat destined for Tekirdag, Turkey.

More ships carrying wheat are expected to follow in the coming days, including MV Brave Commander, a Handysize vessel, which is expected to arrive Aug. 12 to load 23,000 mt of wheat for shipment to Ethiopia under the UN's World Food Program purchase, Russian news agency Interfax reported Aug. 11.

Ukrainian wheat discounted

Market participants remained hopeful that the resumption of wheat shipment out of Ukraine will help alleviate global grain supply tightness. Asia market participants, in particular, have been watchful of the flow from Ukraine, which could impact Australian wheat prices.

A Bulgarian crusher was heard offering 30,000-35,000 mt wheat of Ukrainian origin at around $370/mt CFR SE Asia for September shipment, one source said. When compared to Australia wheat however, prices were heavily discounted.

Australia Premium White was sold to a Malaysia buyer at around $405/mt CFR for December-January shipment Aug. 11, another source noted.

Australian shipping slots are getting tighter for even December to January shipments, so wheat prices there are not likely to be pressured by cheaper offers due to the promptness, multiple source said. However, South American origin wheat -- which comes into season from December -- is likely to pose a bigger threat to Australia.

Another ship, MV Star Laura, also left the port of Pivdenniy carrying 60,150 mt of corn destined for Bandar Iman Khomeini, Iran, according to the Joint Coordination Centre, which is overseeing the shipments.

More than 430,000 mt of agricultural commodities have been shipped out of Ukraine since Aug. 1, according to data from S&P Global Commodity Insights.

Market participants have indicated that while the successful departure of stranded ships from the Black Sea and the news of fresh ships entering the region are all positive signs, they are eager to see bigger Panamax-size ships entering and leaving with grains loaded.

The high insurance on additional war risk premium and shipowners' unwillingness to send ships continue to remain as challenges, sources said.