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Ukraine's main ports see first private FOB grains trade since February: traders

Highlights

Ukraine's deepsea ports were closed from Feb 24 to late July

Vessel owners have been reluctant to send in new ships

Market keen to see resumption of FOB trading on commercial basis

  • Author
  • William Bland
  • Editor
  • Alisdair Bowles
  • Commodity
  • Agriculture Shipping
  • Topic
  • Food Security War in Ukraine

A European trading house was heard to have bought a Handysize cargo of Ukrainian milling wheat for shipment in the second half of August, several trading sources said Aug. 16, in what would be the first such trade since Russia's invasion almost six months ago.

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In normal conditions, Ukraine is among the world's largest exporters of wheat and corn, but almost all of those grains were previously shipped from three deepwater ports on the country's Black Sea coast, as well as the nearby port of Mykolaiv. The closure of those ports pushed up global prices and left at least 13 ships stranded and laden with some 600,000 mt of wheat and corn.

Many of those ships have left in recent weeks, following a UN-brokered deal between Russia and Ukraine under which the two countries agreed to create a safe corridor. However, the grain trading community has said that the full potential of the agreement will only be felt if international traders are willing to buy Ukrainian grain on an FOB basis and send in new vessels to collect it.

"Until insurance issues are formalized, we don't expect incoming vessels," one trader said shortly after the deal was announced.

London insurer Ascot and broker Marsh subsequently said that they would provide coverage, but some sellers said that they would need to see lower FOB prices from Ukraine. Price were at $280/mt for corn to be shipped in late August.

"I would never buy a FOB Ukraine cargo at same value as Brazilian [corn]," a second trader said. "I wouldn't be able to sell it [to buyers at the destination country] until I saw the ship was already in the Mediterranean," they added, pointing to the risk of a ship getting stuck in Ukraine.

The UN provided some further stimulus to the market when it held a tender for Ukrainian wheat under the World Food Program at the end of July, and the organization said Aug. 16 that 23,000 mt of wheat was sold as part of the tender had left Ukraine's Pivdennyi port.

However, traders have been waiting to see when trading would resume between private companies. Three sources said Aug. 16 that they had heard that an Italian company had bought 11.5% protein milling wheat at $260/mt FOB Chornomosrk for shipment in H2 August. The companies named both declined to comment.