Black Sea: fragile flows grow

[Update Below] Grain and other agricultural flows from three Black Sea port are persisting (see first map below). Reuters reports, “A total of 61 cargo ships carrying around 1.5 million tonnes of food have left Ukraine under a deal brokered by the United Nations and Turkey to unblock Ukrainian sea ports…” (more)

This Black Sea flow is now sufficient to effectively compete with Australian grain exports to Asia. According to S&P, “when Ukraine started offering wheat in Asia in early-August, payment and banking issues as well as high freight cost and insurance were key concerns. However, as the flow of ships from Ukraine increased, confidence in cargo execution has grown, an Indonesian buyer said.

Ukraine’s principal port at Odesa is less than 100 miles from the frontlines at Kherson (see second map below). The fragility of current flows were underlined on Tuesday when Russian artillery hit grain silos at Mykolaiv (not one of the ports protected under the UN/Turkey agreements with Ukraine and Russia).

September 2 Update: As a quick mention in a round-up of several food-related reports, Bloomberg notes, “The grains sector has reduced a price spike of about 40% in the first half to around 10% this year to Aug. 30 as the Corn Belt harvest approaches. The bias is tilted toward a downward phase of the commodity price cycle into year-end…” Canada’s harvest looks good. US grain production has been mixed. Not bad overall, but not good enough to make up for shortages elsewhere.