The first wheat shipments are expected to start leaving Ukrainian ports next week, according to the United Nations interim coordinator at the joint center in Istanbul, which oversees the implementation of the Russian-Turkish agreement on grain, Frederic Kenny.
It is true that the agreement created a protected corridor to alleviate global food shortages, but the bulk of shipments that have taken place after it was signed on July 22, so far, have been corn, usually used to feed animals or to produce biofuel ethanol. Additionally, small amounts of soybean and sunflower oil were delivered but there have not yet been any shipments of wheat.
According to a Reuters report, there are an estimated three million tons of grain in the ports that must be transported first, which will likely take until around mid-September to complete their shipment.
Ukraine has about 20 million tons of grain left over from last year’s harvest backlog across the country, as well as this year’s wheat harvest, which is estimated to be around 20 million tons.
The three ports involved in the agreement – Odessa, Chornomorsk and Bivdnyi – have a total capacity to ship about three million tons per month. Some expect that this level of exports could be achieved in October.
However, you would need a large number of ships to transport such a large volume of grain, and some ship owners may be wary of entering a war zone, particularly with the threat posed by mines and the high cost of insurance.
Insurance companies said earlier that they are ready to provide cover if there are arrangements to sail alongside an international navy and a clear strategy to deal with sea mines.
The Middle East and North African countries
MENA countries depend on wheat from Ukraine and Russia. The latter has only recently allowed the resumption of wheat exports. This week, the fighters agreed on a 10-nautical-mile safety zone to protect neutral cargo ships carrying grain from the latter’s Black Sea ports.
This is important for grain markets. Ukrainian wheat accounted for a tenth of the world’s wheat in 2018-2020. Its exports collapsed 40 percent year on year. Saxo Bank indicates that this is the main reason for the wheat deficit in the world this year by about 13.5 million tons, quoting the “Financial Times”.
And marine insurance companies expressed their willingness to provide insurance for these shipments. Noting that it doubled its coverage to 50 million dollars per ship.
There is also uncertainty about how quickly any new crop can be harvested and stored when 13 percent of last year’s crop remains in silos, according to the International Food Policy Research Institute.
The heat wave in much of the northern hemisphere threatens all crops, including wheat, as the harvest season begins.
In any case, it is necessary to monitor whether shipments of wheat will actually start next week and the extent to which this will affect prices.