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

Ukraine’s infrastructure minister has warned that it will take months for grain exports from Odessa and neighboring ports to reach pre-war levels and alleviate the global food crisis, despite the easing of a Russian blockade in the Black Sea.

After the departure on Monday of a ship carrying maize from Odessa to Lebanon — the first under a Russia-Ukraine deal brokered by the UN last month — Oleksander Kubrakov said he expected no more than five ships were to depart from Odessa, Chornomorsk and Pivdennyi.

Last August, 194 grain ships departed from Ukrainian ports, including now Russian-controlled Mariupol, according to London-based shipbroker Braemar. Odessa, Chornomorsk and Pivdennyi previously processed about 60 percent of all Ukrainian grain exports.

“The first two weeks will be a piloting regime, when we will have one, two, three ships, and then we will receive the first one, two, three ships that come in,” Kubrakov said in an interview.

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

At least 16 ships are stuck in Ukrainian ports with shipments and crews waiting for authorities to test safe passage through naval mines – laid by both Russia and Ukraine – and the threat of Russian missiles. Moscow has pledged not to target ships carrying food if it can conduct joint inspections to ensure returning ships do not contain weapons.

Map showing the position of the Razoni bulk carrier leaving Odessa bound for Lebanon with 26,000 tons of maize

Prices of wheat, maize and vegetable oils skyrocketed after the Russian invasion of Ukraine in February. But the prospect of a reopening of the Black Sea corridor, along with fears of a global recession and record harvests in Russia, have recently pushed agricultural commodity prices down.

Chicago wheat, the international benchmark, has fallen to less than $8 a bushel, or the level prior to the invasion of Moscow. Corn has lost nearly 30 percent from its April peak.

However, many vulnerable countries that rely on Ukrainian grain face acute food insecurity. Ukraine accounts for 80 percent of Lebanese wheat imports and is a major supplier to countries such as Somalia, Syria and Libya.

Moving the 20 to 25 million tons of grain trapped in Ukraine will require at least 371 loads of medium-sized ships capable of carrying 40,000-69,000 tons of deadweight – or nearly twice as much as the smaller “Handysize” ships like the Razoni, who 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 pace of exports.

Line chart of CBOT wheat ($ per bushel) showing wheat prices back to pre-war levels

A UN official said the commercial shipping industry was “waiting” to see how the first voyages would unfold. “That’s why this test vessel is so important: to build trust, to show that ships can sail in and out safely,” she says.

Chris McGill, chief of ocean freight insurance at insurer Ascot, said he was “concerned about the accuracy of the security corridors” because the tide in the Black Sea could move the mines.

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

The complicated logistics of crossing the Black Sea and Bosphorus to sub-Saharan ports, which are usually not very deep, means that a large number of smaller vessels will be needed to ship the captured grain, reducing the risk of long queues increase while ships are checked.

Intercargo, the trade group for dry bulk shipowners, said the industry needed more assurance that merchant ships would not be bombed. Shipowners would also be reluctant to send their ships to ports if the situation remains unstable.

“I understand that no one can give any guarantees,” Kubrakov said, pointing out that Odessa was hit by Russian missiles just a week ago. “We hope this will not be repeated, but such attacks could pose problems for the future.”

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