Progress made in Russia-Ukraine talks on grain export corridors
Progress was reported at the talks between Ukraine and Russia this week, aided by Turkey, about the creation of grain export corridors, raising the chances of a healthier Ukrainian export supply in the near term.
Encouraging statements from the UN on those negotiations is increasing confidence that Ukraine will be able to export commodities in greater volumes.
“Today in Istanbul, we have seen a critical step forward to ensuring the safe and secure export of Ukrainian food products through the Black Sea,” said UN Secretary-General Antonio Guterres on Wednesday.
“More technical work will now be needed to materialize today’s progress. But the momentum is clear,” he added.
The details of those talks are still unknown, and there remains hurdles and agreements to be concluded, commented CRM Agri in an update.
Dangerous shipping environment
“Even with export corridors, there will still be barriers to trade, given what would still be a volatile and potentially dangerous shipping environment.
“Financing and insuring vessels will remain a challenge not only for exports from Ukraine but also Russia. AIS vessel tracking data highlights the current lack of cargo vessels approaching or leaving Ukraine ports, currently either occupied by Russian forces or mined by Ukraine to prevent invasion.
“And there remains an uncertain situation for vessels collecting grain from Russian controlled areas with shipping potentially operating without legally required tracking data,” noted the agriculture commodity market specialists.
Exports are still likely to be hindered and will remain slower than markets have grown accustomed to over the years, they added.
There has been a notable increase of grain exports to western Europe via inland shipping, including on the Danube river. Export of crop products from Ukraine by road also continues to make progress, with a reported 55% increase in June exports by road compared to May with a potential to reach over a 400Kt per month export capacity.
Exports by rail have also continued to gain pace with exports in June falling just shy of 1Mt.
“Together, Ukraine's export pace potential is in the region of 2.5Mt per month, half that of pre-war levels.
“The impact of this slower export campaign will be a front loading of demand for grain in the UK and Europe as normal trade flows and seasonal demand becomes impacted," said the CRM Agri team.