News From Ukraine: How did the markets and trade react to recent missile attacks?
We want to take the time to check in on farmers in Ukraine as harvest in the country continues. Today, we are hearing from farmers about the reactions of the grain markets and exports to Russian missiles hitting the country.
This week in Ukraine started with massive shelling of cities. Russian forces launched 84 missiles at civilian object and infrastructure. There were casualties and injuries as a result of these war crimes. The grain market responded instantly to the shelling with an increase in wheat prices. Wheat futures rose by 5 percent. This raised fears that the escalation of war poses a new threat to grain exports from the Black Sea. According to Bloomberg, the latest escalation calls into question whether Ukraine’s grain export deal, expiring in about a month, will be extended. After all, Ukraine is an exceptionally important supplier of wheat and other crops globally.
“We do not rule out further food security problems if any of the world’s key producers have production issues or the situation in the Black Sea region does not improve.” This was the message from high-tower port analysts in a note to its clients.
Currently, the situation in the grain corridor is rather complicated. In recent weeks, a long queue of ships formed at the entry of the corridor, which counts about 100 vessels. 14 is the maximum number of vessels that you can call from Ukrainian ports in one day. We asked Ismin Palla, the UN’s spokesperson for the Black Sea Grain Initiative to explain the reasons for the jams.
“The congestion in the Sea of Marmara is due to several reasons, including increased interest from the industry in the Initiative, the readiness of vessels to be inspected whereby JCC inspection teams may have to return to the same vessel two or even three times to complete the inspection, and the existing inspection capacity of the JCC,” said Palla.
However, our sources in the grain market claim that the congestion is also due to the fact that the Russian side is trying to reduce the number of inspection teams. For the corridor to work effectively, they need to inspect 25 vessels daily.
Ismini Palla denies these claims.
“I cannot speak on behalf of the Russian delegation. We have been aware of any plan from the JCC delegation to reduce their standing inspection capacity,” said Palla.
There is about a month left until the end of the first stage of the grain deal. With the escalation of military actions, the likelihood of it will not be extended is growing.