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Black Sea Watch: Ukrainian grain flows climb amid safe passage confirmation


March daily average flows hover 11% above February

Shipment size approaches record high

Duration of passage deal extension remains uncertain

  • Author
  • Nikolaos Aidinis Antonopoulos    Konstantinos Frentzos
  • Editor
  • Surbhi Prasad
  • Commodity
  • Agriculture Shipping

Robust grain volumes and a growing average shipment size during the week March 13-19 reflected market optimism regarding the extension of the UN-brokered safe passage agreement, with the exact duration of the extension remaining contested as market sources point to a likely period of 60 days, instead of the previous 120 days.

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"I heard 60 days, hope the extension will be longer," said an Italy-based shipbroker on the Black Sea Grain Initiative extension, pointing to a vessel inspection waiting time in the 25-30 days range. "It depends on the shippers."

"They said 60 days instead of 120," said a Greece-based ship operator, agreeing that this might complicate the situation. "Let's see how they implement it."

The UN-brokered Black Sea Grain Initiative -- first signed last July by Russia, Ukraine, and Turkey -- was renewed for a second time March 18, according to an official UN statement.

"Good question that only the Russians have the answer for," said a UN spokesperson to S&P Global Commodity Insights' inquiry. "We do not know how they will want to proceed in 60 days, we remain focused on the continuation of the agreement even without a concrete duration."

"I wish I knew [more] about the deal extension and none of our clients does," said a Ukrainian charterer. "So far we treat it as if it's working and we'll see down the line."

In recent Panamax fixtures, the 2014-built, 81,797 dwt Zheng Hui was heard fixed to open passing Canakkale prompt via Ukraine with a dry bulk cargo, redelivery Far East at $29,800/d with LDC.

Meanwhile, a 50,000-mt (plus or minus 10%) wheat cargo was heard fixed for an Odessa-to-Mombasa trip, opening prompt and discharging on April 10 at $50/mt with LDC, while a Supramax vessel was heard fixed with grains for a time charter trip delivery Constanza and redelivery Singapore-Japan with a duration of 50 days on April 1 with Polaris Shipping.

Elsewhere, a 52,000-mt sunflower seeds cargo heard fixed for a time charter trip delivery Varna and redelivery in the Amsterdam-Rotterdam-Antwerp-Gent region on laycan dates March 30-April 3 with Baltnav.

Yet, the vessel inspection waiting time is still a significant challenge for the Black Sea grain Initiative as more than 100 ships were heard to be in queue, according to a shipbroking source.

"I see more than 100 vessels and with this enormous line of ships still persisting at the Bosporus the new deal it's kind of vague," the Ukrainian charterer added. "Although it would be great for market to absorb there as many ships as possible, disruptions are always good for market."

Despite the duration uncertainty, the extension of the safe passage agreement remains a positive development for the global dry bulk markets, with the Platts KMAX 9 Index, a weighted average of time charter equivalent rates on key Kamsarmax routes, last reported at $14,643/d March 17, some 26% below the 2022 full-year average.

Robust seaborne flows

So far, the Black Sea Grain Initiative has 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 25 million mt as of March 20, according to data from the UN's Joint Coordination Centre.

Still, grain flows so far in March out of the three key Ukrainian ports has reached 134,682 mt/d, some 11% higher than the daily average observed during February.

Corn exports have been dominating Ukraine's seaborne flows, claiming almost 63% of volumes so far in March, with wheat exports accounting for 19% of this month's shipped grains, data from the JCC showed. The rest have been mostly sunflower products, barley, soya beans and rapeseed.

In terms of regional destinations, proximity supported flows to Europe and Central Asia, which has attracted over 47% of grain volumes out of the three Ukrainian ports during the period March 1-20, according to the JCC, with East Asia and the Pacific claiming a bit less than 39% of the flows. Middle East and North Africa region is bound to receive about 10% of the flows so far in March, with South Asia's and Sub-Saharan Africa's share at about 2% each.

As for the income distribution of the recipients, about 45% of Ukrainian grains during the period March 1-20 were expected to reach high-income destinations, with another 49% destined for upper-middle-income markets, data from the JCC showed. In addition, some 5% of March flows were now expected to reach lower-middle-income countries, and another 2% was earmarked for low-income destinations.

The average shipment size during the period March 13-19 has climbed 20% on the week to approach the record highs observed earlier in March, reaching over 49,000 mt, data from the JCC showed.

As for the largest cargo observed during the week March 13-19, a 67,157 mt shipment of corn was reported by the JCC to have departed the terminals of Yuzhny/Pivdennyi March 14, now on its way to Spain, aboard the 2004-built, 76,602 dwt Navios Orbiter.

Platts is part of S&P Global Commodity Insights.