Ukraine warns grain exports will take ‘months’ to reach prewar levels

Ukraine’s infrastructure minister has warned it will take months before grain exports from Odesa and neighbouring ports reach prewar levels and alleviate the global food crisis despite the relaxation of a Russian blockade in the Black Sea.

Speaking after the departure on Monday of a ship transporting corn from Odesa to Lebanon — the first under a deal between Russia and Ukraine brokered by the UN last month — Oleksander Kubrakov said he expected no more than five vessels to leave in the next two weeks from Odesa, Chornomorsk and Pivdennyi.

Last August, 194 grain-carrying vessels departed Ukrainian ports, including now Russian-controlled Mariupol, according to London-based shipbroker Braemar. Odesa, Chornomorsk and Pivdennyi previously handled about 60 per cent of all Ukrainian grain exports.

“The first two weeks will be a pilot regime, when we will have one, two, three vessels out, and then we will receive the first one, two, three vessels coming inward,” Kubrakov said in an interview.

“In one to one and a half [months], I hope that if everything goes to plan, the market will see this mechanism is working, that insurance is available, that it’s cheaper and it will simplify the entire process.”

At least 16 ships are trapped in Ukrainian ports with shipments and crew waiting for authorities to test a safe passage through sea mines — laid by both Russia and Ukraine — and the threat of Russian missiles. Moscow has pledged not to target ships transporting food if it can carry out joint inspections to make sure returning vessels do not contain weapons.

Prices of wheat, corn and vegetable oils soared in the wake of Russia’s invasion of Ukraine in February. But the prospect of a reopening of the Black Sea corridor, along with global recession fears and record crops in Russia, have recently pushed down agricultural commodity prices.

Chicago wheat, the international benchmark, has declined to under $8 a bushel, or levels preceding Moscow’s invasion. Corn has lost almost 30 per cent from its April high.

However, many vulnerable countries reliant on Ukrainian grain are facing acute food insecurity. Ukraine accounts for 80 per cent of Lebanon’s wheat imports and is a big supplier for countries including Somalia, Syria and Libya.

Moving the 20mn-25mn tonnes of grain trapped in Ukraine will take at least 371 loadings of medium-sized vessels that can carry 40,000-69,000 deadweight tonnes — or nearly twice as many of the smaller “Handysize” vessels such as the Razoni, which set sail on Monday, according to Braemar.

Kubrakov said he hoped a few safe passages would allow “free markets” to step in and pick up the tempo of exports.

A UN official said that the commercial shipping world was “waiting to see” how the initial voyages went. “That’s why this trial ship is so important: to build trust, to show ships can go in and out safely,” she said.

Chris McGill, head of marine cargo underwriting at insurer Ascot, said he was “worried about the accuracy of the safety corridors” because the tide in the Black Sea could move the mines.

Allowing stranded ships to depart is also vital to creating space in Ukrainian ports for vessels to arrive, the UN official said. “The ambition here is to get the ships out, get new ships coming in and have regular traffic.”

The complicated logistics of navigating the Black Sea and the Bosphorus to sub-Saharan ports, which tend not to be very deep, means that a large number of smaller vessels will be required to ferry out the trapped grain, raising the prospects of long queues while vessels are being checked.

Intercargo, the trade group for dry bulk shipowners, said that the industry needed greater certainty that merchant ships would not be bombed. Shipowners would also be loath to send their vessels into the ports if the situation remains volatile.

“I understand that nobody can make guarantees,” said Kubrakov, pointing out that Odesa was hit by Russian rockets just a week ago. “We hope this won’t be repeated, but such attacks could make problems for the future.”