Reuters reports this, citing sources in the shipping and grain industries. According to the agency, as of 6:10 p.m. local time on July 10, Russian border guards stopped accepting new applications for passage through the Kerch Strait, and no timeline has been given for when traffic will resume.
The restrictions were imposed following a massive attack by Ukrainian drones on Russian ships in the Sea of Azov. Various sources claim that 13 to 21 large-tonnage vessels were damaged.
Although drones do not always cause ships to sink, they are capable of inflicting serious damage, which can take ships out of service for extended periods while they undergo repairs. If such attacks continue, they could gradually reduce the available fleet and increase crews’ reluctance to go on voyages due to growing safety risks. Up to 25% of Russia’s wheat exports pass through the Sea of Azov, and the Rostov Region and Krasnodar Krai are key grain-producing regions of the country, so disruptions in shipping could significantly impact export logistics, according to ukragroconsult.
Amid reports of possible disruptions to export routes, September wheat futures on the European exchange Euronext rose by nearly 4% on July 10, reaching a six-week high. The market reacted to the risks of reduced supplies of Russian wheat, which holds a leading position in the global export market.
Earlier, Logos Press reported that amid shipping problems in the Sea of Azov, wheat futures rose 2.14% on Friday on the CBOT exchange in Chicago.
Reaction of the Russian and Ukrainian Grain Markets
Russian Telegram channels and regional sources report that following the imposition of restrictions, the ports of Azov, Rostov-on-Don, and Taganrog have temporarily suspended grain receipts. There have also been reports of lines of grain-laden trucks at the ports, and loaded ships are unable to set sail.
If shipping restrictions persist for an extended period, this could increase pressure on Russian grain exports during the peak harvest season. At the same time, any disruptions to shipments from the Azov region could prop up global wheat prices and increase volatility in the grain market.
According to brokers at ASAP Agri, in the short term, sellers may use the uncertainty surrounding the Sea of Azov and the Kerch Strait as a justification for raising prices. However, the overall impact on the market remains limited as long as Russia’s deep-water Black Sea ports continue to operate.
Konstantin Sobol, founder of Marelis Navigation S.A., points out that Azov Sea shipments are largely handled by coasters (small-tonnage seagoing vessels) and river-sea vessels. Due to their shallow draft and limited technical capabilities, this fleet primarily operates on short routes between the Azov and Black Seas, particularly toward Turkey.
“If navigation in the Sea of Azov is restricted, part of the coastal vessel fleet and river-sea vessels that have been operating with Russian ports will be left without cargo. They cannot simply switch to long-distance sea routes, so they will seek work in the Black Sea—in Ukraine, Romania, Bulgaria, and Georgia,” Sobol noted.
According to him, part of this fleet may shift to Ukrainian routes, including ports on the Danube. This will increase the number of vessels available to exporters and may lower freight rates. “There will be more barges on the market, which means freight rates for shipments from the Danube could go down. Even a pause of just a few weeks in Azov shipments is already creating an opportunity for Ukrainian traders,” latifundist quotes the expert as saying.
At the same time, some experts believe that attacks on Russian vessels in the Sea of Azov could lead to intensified attacks on Ukrainian Black Sea ports. Consequently, traders will factor increasing risks into the cost of logistics, insurance, and Ukrainian grain overall, which will reduce its competitiveness. Overall, other Black Sea region countries—primarily Romania and Bulgaria—may benefit from the rising prices of Russian and Ukrainian grain.
