Photo: Paolo Galasso / Alamy via Reuters
The Russian Federation’s increasingly frequent missile and drone attacks on ports, ships, railways, and energy infrastructure are threatening Ukraine’s grain exports. Port terminal operators are facing mounting losses that they cannot cover on their own, Reuters reports.
The agency emphasizes that more than 90% of Ukraine’s grain exports pass through Black Sea ports. Ports in the Odesa region have recently been handling about 6 million metric tons of cargo per month.
“Due to the attacks, export volumes from Odessa’s ports may fall to 4 million metric tons per month,” said Taras Vysotsky, Ukraine’s Deputy Minister of Economy. He added that, due to the high cost of logistics, no more than 1 million metric tons could be redirected to ports on the Danube.
High Carryover Grain Stocks in Ukraine
A 30% drop during key export months will create serious problems for exporters, as Ukraine enters the new season with large carryover stocks, which will put downward pressure on domestic prices and reduce farmers’ incomes, Reuters notes.
Ukraine’s carryover grain stocks stood at 9.5 million metric tons as of July 1. In July of last year, Ukraine’s grain stocks stood at 7 million metric tons, and a year earlier, at 6.4 million metric tons.
In addition, disruptions to exports could also have far-reaching consequences for Ukraine’s economy as a whole, since the sale of agricultural products is a key source of foreign exchange earnings.
Impact on the Global Grain Market
In recent seasons, the country has accounted for about 6% of global wheat exports and about 11% of global corn exports. A reduction in this flow of goods will be felt by the global market as a whole, as well as by regional markets in particular.
Losses incurred by Ukrainian port terminals since the start of the war amount to $1.5 billion, said Denis Marchuk, deputy chairman of the All-Ukrainian Agrarian Council, adding that terminal operators do not have enough money for reconstruction.
Vysotsky stated that the government is aware of the situation, but budgetary resources are currently focused on preparing the Ukrainian energy sector for winter.
