War Disrupts Grain Exports from Black Sea Region

The escalating war between Russia and Ukraine has caused significant disruptions to grain exports from the Black Sea region, affecting both countries' economies. The conflict has led to attacks on commercial vessels, terminals, and ports, making it increasingly difficult for these major grain exporters to move their crops to global markets.

Analysts warn that with the new harvest underway, the disruption could soon become much harder for the global grain trade to absorb. In Ukraine, exports have fallen by 75% in the first two weeks of August compared with the same period last year, according to local authorities. Russian strikes have brought shipments through Ukraine's Black Sea ports close to a standstill.

The impact on grain prices is already visible, with FOB prices at Novorossiysk dropping to $224 per tonne for wheat, $196 per tonne for barley, and $222 per tonne for corn. ProZerno analyst Vladimir Petrichenko has revised his outlook, predicting that exports through the Novorossiysk seaport will be 1.5 million tonnes at best if exports remain blocked.

Russian grain farmers are sounding the alarm, warning of unprecedented losses due to falling prices and mounting stocks. The Russian government is discussing allocating 10 billion rubles ($117 million) to subsidize railway delivery of grain to ports in the Northern basin and the Far East, but this may only have a minor impact.