Only seven crop vessels remain in the Ukraine crop corridor as Russia threatens to exit the grain pact later this week, bringing traffic grinding to a halt.
(Bloomberg) — Only seven crop vessels remain in the Ukraine crop corridor as Russia threatens to exit the grain pact later this week, bringing traffic grinding to a halt.
No fresh inbound ships have cleared inspection through the corridor in more than a week, after a disagreement between parties at the Joint Coordination Centre in Istanbul that’s tasked with checking all boats. That’s left only a trickle of outbound traffic transiting the safe passage, lineups posted by the United Nations show.
The Black Sea deal has allowed Ukraine to ship more than 30 million tons of produce from three major ports, helping to bring down global food prices down after they spiked following Russia’s invasion. But Moscow has repeatedly threatened to pull out of the pact, saying that a parallel agreement to remove obstacles to its own agricultural exports hasn’t made enough progress.
Nikolay Gorbachov, president of the Ukrainian Grain Association, said that Ukraine would not be able to meet its full crop-export potential — about 44 million tons — in 2023-24 without the corridor.
The UN said that of the seven ships still in the system, one is in port, one is transiting the corridor and the rest were awaiting inspection. Wheat traded in Chicago edged 0.4% lower on Tuesday, after gaining 4.1% on Monday.
The current hiatus is paralyzing shipments, according to Dmitry Timotin at Inzernoexport GmbH Agency in Odesa, which typically arranges port calls for three vessels a month.
“We don’t have any new grain contracts because everyone is waiting for information on what will happen with the grain corridor,” he said. “Our terminal is not working at the moment because there are no incoming ships.”
While Ukraine can ship some volumes by river and rail via its European Union neighbors if its own ports are not operating, those flows are also facing problems. Five eastern EU nations have temporarily restricted imports of Ukrainian grain, and are allowing only cargoes in transit.
Timotin said he had an alternative project to ship grain through the river port of Izmail, but the volumes would be much smaller.
The UN — which brokered the grain deal with Turkey — said on Monday that discussions are continuing. Kremlin spokesman Dmitry Peskov said on Tuesday that many questions on the pact remain and that Russia would make an announcement when a decision has been made, according to Tass.
Despite Moscow’s grievances, Russia is expected to ship record volumes of grain this season, while its exports of fertilizers are climbing back to pre-war levels.
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