Black Sea Watch: Grain flows edge lower as congestion, delays bite

Ukrainian grain flows eased considerably during the first full week of the renewed Black Sea safe passage agreement amid escalating congestion and inspection delays and despite initial optimism.

According to analysis of data from the UN’s Black Sea Grain Initiative Joint Coordination Centre S&P Global Commodity Insights, seaborne Ukrainian grain flows through the Black Sea during the period Nov. 21-27 tumbled 39% week on week to 601,486 mt, in below the weekly average so far and marking the eighth weakest weekly performance since the inception of the Black Sea Grain Initiative deal.

The UN-brokered Black Sea Grain Initiative, signed July 22 by Russia, Ukraine and Turkey and renewed earlier in November for another four months starting Nov. 19, enabled the resumption of exports of grains and other foodstuffs 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 12.2 million mt as of Nov. 27.

Shipments during Nov. 21-27 remained higher than early November levels when they had fallen to barely over 500,000 mt per week during the first two weeks of the month, as traders and vessel operators hesitated to assume the risk of navigating the Black Sea.

“The market collapsed, there are few orders from Ukraine and almost nothing from Russia for Panamax vessels,” a shipbroker said, adding: “Nobody was shipping cargo into ports while they were negotiating the safe passage agreement extension.”

“Also, cost and freight prices are falling. There was a delay with starting the shipments after the renewal … wait until mid-December.”
Cargo sizes have continued to grow, with the average grain cargo during the week above 33,415 mt, up 4% on the week and marking the second-largest weekly average since early August, according to JCC data.

The largest cargo during the week was 71,000 mt of corn that departed from the terminals of Yuzhny/Pivdennyi Nov. 26 on the 79,699 dwt Sauvan.

The JCC said late Nov. 27 that “currently 98 vessels are waiting in Turkish territorial waters. Out of those 98, 75 are waiting to move — following inspection — into Ukrainian ports with the capacity to export approximately 1.7 million tons of grain and other food products.”

Some of the vessels have waited for over a month, with the remaining 23 vessels already loaded with cargo and awaiting outbound inspection.

JCC has been reporting that delegations from the participant countries were seeking ways to increase the number of successful inspections, with the number of inspection teams remaining stable so far at three per day and planning to conduct 12 inspections Nov. 28, four on inbound vessels and eight on outbound.

In terms of regional destinations, Europe and Central Asia attracted almost 70% of the cargo volumes in the latest week, with 12% heading to East Asia and Pacific, and about 10% destined for the Middle East and North Africa. The remaining volumes were shipped to South Asia, JCC data showed.

As for cargo types, corn shipments took the lead during the period Nov. 21-27, accounting for almost 53% of total shipments, almost doubling its share on the week, with wheat accounting for less than 21%, with its portion nearly halving.

The remaining cargoes included barley, sunflower products, as well as other foodstuffs, according to JCC data.

The proportion of shipments destined for high-income regions continued to increase to account for almost 66% of the volume shipped during the week ended Nov. 27, with the rest heading to mid-income destinations and no shipments reported for low-income destinations.

With dry bulk freight prices falling, market participants had expressed doubts as to whether the Black Sea Grain Initiative could provide enough support to rates due to the lower volumes shipped, with the Platts KMAX 9 Index, a weighted average of spot time charter equivalent rates on key Kamsarmax routes assessed by Platts, last standing at $10,958/d on Nov. 25, well below the $20,479/d average for 2022 to date and inching toward the 2021-22 low of $10,683/d on Jan. 4, 2021.

Tags: grain, Black Sea, shipments, UN, barely, Black Sea Grain Initiative, JCC, Ukraine, Russia