As seaborne Ukrainian grain exports via the Black Sea are stabilizing at above-average levels and shipment size exhibits positive momentum, traders’ and shipowners’ views are reported to diverge in the freight markets and Black Sea grains see turbulent trading.
The UN-brokered Black Sea Grain Initiative, signed July 2022 by Russia, Ukraine and Turkey and renewed for a second time in March for at least two months, enabled the resumption of exports of grains from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative grain shipments under the safe passage deal reaching almost 26.77 million mt as of April 3, data from the Initiative’s Joint Coordination Centre showed.
“The market is annoyingly silent,” said a Ukrainian charterer. “Last week Handysize vessels were fixed for cargoes between $13,000/day and $14,000/day passing Canakkale,” he added, explaining that “owners who rate Ukraine for us are asking more, like 16,000/day-$17,000/day passing Canakkale while the rates, which traders give us as workable, are equivalent to even less than $13,000/day-$14,000/day.”
Seaborne Ukrainian grain flows though the Black Sea edged higher during the period March 27-April 2, up almost 6% on the week with volumes reaching some 852,448 mt, according to data from the JCC, to hover some 88,000 mt above the weekly average levels observed since early August.
In the Panamax segment, the 2019-built, 82,000 dwt Star Sapphire was heard fixed to open Jorf Lasfar April 9 for a trip via Ukraine with grains to Singapore/Japan, while the 2008-built, 77,008 dwt Leni was heard fixed to open Port Said April 11-12 via Novorossiisk to Mediterranean at $22,000/day and the 2006-built, 76,781 dwt Anthea was rumored to be on subjects to open Haifa April 5 for a trip via the Black Sea to Mediterranean at $22,000/day.
In terms of cargo types, corn accounted for over 55% of the Ukrainian seaborne grain flows via the Black Sea during the week March 27-April 2, as wheat claimed another 30% of the volumes, and sunflower oil accounted for the rest, JCC data showed.
The average shipment size grew on the week, with data from the JCC pointing to an average shipment size of over 42,622 mt during the period March 27-April 2, up almost 17% on the week and some 10,000 mt above the average levels observed since early August.
As for destinations, about a third of the March 27-April 2 Ukrainian seaborne grains are expected to reach markets in Europe and Central Asia, with another 25% on the way to East Asia and the Pacific region, according to data from the JCC, while Middle East and North Africa claimed almost 24% of the flows. The rest are expected to arrive in South Asia.
Black Sea grain turmoil
The Russian wheat market strengthened by $2/mt March 27-31 as rumors persisted about the country’s wish to set a price floor of $275-$280/mt at which wheat exporters could sell their grain. Traders saw higher offers for 12.5%-protein Russian wheat at $278/mt and a Panamax bid at $275/mt FOB Novorossiisk for April-May shipment.
As exporters rush to sell their wheat on a record harvest in 2022 before the new crop starts in July, Cargill, Viterra, ADM and LDC, some of the country’s largest exporters of Russian wheat, said they were pulling back some ventures from the Russian market as the multinationals reviewed their operations in the country from July 1, 2023, the start of the next marketing year. The hasty departures cast doubt on the Russian grain market’s prospects for the 2023–24 marketing year, sources said.
The Ukrainian corn market fell sharply by $11/mt to $224/mt March 27 before settling throughout the week. The steep fall came as farmers felt under pressure to raise money, aggravated by rising fuel and fertilizer costs, as the country’s spring crop planting season had already started in March. The FOB market has become less desirable as buyers take into account the war’s higher logistical risks of operating vessels out of the grain corridor. “Cash is required for the ongoing new crop planting and fertilizers,” a trader said. “Such [low] level is less than cost of production, but desperate farmers have no other option.”
“I see no market whatsoever, [nor active] participants in the FOB market, and this persists for months,” another trader said, with another source saying they had “only seen CIF offers” from the grain corridor. The CIF basis side of the market has turned more lucrative for traders with a trade heard March 30 at $284/mt CIF Spain, after trading $280/mt the previous week, sources said. Higher Panamax offers for CIF Spain were heard March 31 at $284-$286 for April-May shipment.
