Ukrainian grain trade stalls amid intensified port strikes: traders

Grain traders in Ukraine have reduced local purchases following a series of intensified port strikes since July 10, market participants said July 15.

"Many traders have stopped originating as of [July 15], and we are buying limited amounts," a Ukrainian seller said. "We have stocks at the ports, but new purchases are limited."

Kernel, one of Ukraine's largest agribusiness companies, reported extensive damage to its port assets at Chornomorsk after the July 10 attacks.

"The attacks damaged grain loading and unloading equipment, terminal infrastructure, and power supply lines," the company said in a statement July 13. "Grain silos and sunflower oil storage tanks were destroyed or severely damaged, resulting in the blockage, spillage, and quality deterioration of approximately 45,000 mt of wheat and 9,000 mt of sunflower oil. The timeline for resuming terminal operations will depend on the completion of emergency response works and the findings of the engineering assessment."

With the ongoing conflict, market participants said that export trading activity for the old-crop corn has nearly stopped, while price indications for the new crop have surged early in the week.

"Trading activity has decreased for sure," a second seller from Kyiv said.

The seller added that their company would decide later whether to halt CPT purchases on July 15. "We won't be trading as vessels cannot arrive at the port," the seller said.

On July 14, CPT corn prices stood at $211/mt and milling wheat at $209/mt. "I think traders are now putting some risk premiums into CPT prices," a fourth seller from Ukraine said. Platts assessed Ukraine corn FOB POC at $226/mt on July 15 for Aug. 12-26 shipment, stable day over day.

The strikes have lifted wheat export prices at the marketing time for the newly harvested new crop, which was already delayed by one to two weeks. Platts assessed Ukrainian 11.5% wheat at $230/mt on July 15, up $7/mt from July 10.

Disruption to shipping routes

The situation is causing significant disruption to shipping. A fifth local seller estimated that 30%-40% of shipowners scheduled to call Ukrainian ports in the second half of July and first half of August have cancelled voyages, with liner carriers likely to suspend operations soon.

The strikes follow similar strikes at the Azov Sea where trading activity for coasters along the Kerch Strait have also been limited.

"The problem is bringing vessels to the Black Sea," another Ukrainian trader said.

A Geneva-based trader expressed similar concerns.

"At the moment, it is difficult to understand how to ship from Ukraine," the trader said. "There is no point in accumulating volume."

With farmers selling at cost and exporters facing zero margins, risk is high, the trader said.