ISTANBUL, Aug 5: Three more ships carrying thousands of tons of corn left Ukrainian ports on Friday, in the latest sign that a negotiated deal to export grain trapped since Russia invaded Ukraine nearly six months ago is slowly moving forward. But major hurdles lie ahead to get food to the countries that need it most.
The ships bound for Ireland, the United Kingdom and Turkey follow the first grain shipment to pass through the Black Sea since the start of the war. The passage of that vessel heading for Lebanon earlier this week was the first under the breakthrough deal brokered by Turkey and the United Nations with Russia and Ukraine.
The Black Sea region is dubbed the world’s breadbasket, with Ukraine and Russia key global suppliers of wheat, corn, barley and sunflower oil that millions of impoverished people in Africa, the Middle East and parts of Asia rely on for survival.
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While the shipments have raised hopes of easing a global food crisis, much of the grain that Ukraine is trying to export is used for animal feed, not for people to eat, experts say. The first vessels to leave are among more than a dozen bulk carriers and cargo ships that had been loaded with grain but stuck in ports since Russia invaded in late February. And the cargoes are not expected to have a significant impact on the global price of corn, wheat and soybeans for several reasons.
For starters, the exports under the deal are off to a slow, cautious start due to the threat of explosive mines floating off Ukraine’s Black Sea coastline.
And while Ukraine is a major exporter of wheat to developing nations, there are other countries, such as the United States and Canada, with far greater production levels that can affect global wheat prices. And they face the threat of drought.
“Ukraine is about 10% of the international trade in wheat, but in terms of production it is not even 5%,” said David Laborde, an expert on agriculture and trade at the International Food Policy Research Institute in Washington.
The three ships left Friday with over 58,000 tons of corn, but that is still a fraction of the 20 million tons of grains that Ukraine says are trapped in the country’s silos and ports and that must be shipped out to make space for this year’s harvest.
Around 6 million tons of the trapped grain is wheat, but just half of that is for human consumption, Laborde said.
There is an expectation that Ukraine could produce 30% to 40% less grain over the coming next 12 months due to the war, though other estimates put that figure at 70%.
Grain prices peaked after Russia’s invasion, and while some have since come down to their pre-war levels, they are still higher than before the COVID-19 pandemic. Corn prices are 70% higher than at the end of February 2020, said Jonathan Haines, senior analyst at data and analytics firm Gro Intelligence. He said wheat prices are around 60% higher than in February 2020.
One reason prices remain high is the impact of drought on harvests in North America, China and other regions, as well as the higher price of fertilizer needed for farming.
“When fertilizer prices are high, farmers may use less fertilizer. And when they use less fertilizer, they will produce less. And if they will produce less, supply will continue to remain insufficient,” Laborde said.
The three ships that departed Ukraine on Friday give hope that exports will ramp up to developing nations, where many are facing the increased threat of food shortages and hunger.
“The movement of three additional vessels overnight is a very positive sign and will continue to build confidence that we’re moving in the right direction,” Haines said. “If the flow of grain from Ukraine continues to expand, it will help relieve global supply constraints.”
The Turkish-flagged Polarnet, carrying 12,000 tons of corn, left the Chornomorsk port destined for Karasu, Turkey. The Panama-flagged Navi Star left Odesa’s port for Ireland with 33,000 tons of corn. The Maltese-flagged Rojen left Chornomorsk for the United Kingdom carrying over 13,000 tons of corn, the U.N. said.
It added that the Joint Coordination Center — run by officials from Ukraine, Russia, Turkey and the U.N. overseeing the deal signed in Istanbul last month — authorized the three ships and inspected a ship headed for Ukraine. The Barbados-flagged Fulmar S was inspected in Istanbul and is headed for the Chornomorsk port.
The checks seek to ensure that outbound cargo ships carry only grain, fertilizer or food and not any other commodities and that inbound ships are not carrying weapons. The vessels are accompanied by Ukrainian pilot ships for safe passage because of explosive mines strewn in the Black Sea.
After Turkey, which has relations with both Russia and Ukraine, helped broker the food deal two weeks ago, President Recep Tayyip Erdogan was to meet Russian President Vladimir Putin later Friday in Sochi, Russia. That meeting follows another face-to-face meeting the two leaders had in Iran three weeks ago. (AP)
