Ukraine grain shipping on tenterhooks over fear of ‘a few missiles in the wrong direction’

Ukraine grain shipping: Situation 'volatile' says John Rich

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John Rich, chair of MHP, the largest producer and exporter of chicken in Ukraine and a major business in the shipment of grain and sunflower oil, described the current grain shipment situation in the Black Sea as “very volatile”. He described how it would only take a few missiles to ensure “insurance companies and ships become reticent” to move anymore grain, effectively halting the exportation of goods out of Ukraine for the second time this year.  

Mr Rich said: “The question is what is going to happen over the next two to three months. My thesis is that it is obviously a very unstable environment, where we are exporting out of the southern ports is in a very hot military zone. 

“And as we would say in the classics, it does not take a lot to scare the farm. In other words, a few missiles in the wrong direction and all of a sudden, insurance companies and ships might be reticent to ship grain. 

“So, we are in a very volatile situation today. Prices are a little bit lower, which is going to help inflation in the short term, but moving forwards over the next two to three months, there are a lot of unknowns.” 

Asked about the potential crop yield for next year, Mr Rich said: “It’s all about logistics really. So, getting these shipments of grain out of the ground and shipped is essential otherwise we do not have storage. 

“So, the biggest decision for big companies such as ourselves – we produce up to 20 percent of the global sunflower oil production – is do we plant [next year]? 

“And if we plant, how much? It’s all about how much we can store and that depends upon how much we can get out of the country. 

“So, that depends upon the restrictions of what we can get out across rail and road through the European Union and what we can get out through the southern ports to the deep sea ports. 

“So, really, a lot of unknowns. Our decision-making process has to be made within the next five weeks, and it is also heavily influenced by the price of energy.”

Mr Rich’s comments come as news emerged that the ship Brave Commander has left the Ukrainian port of Pivdennyi, carrying the first cargo of humanitarian food aid bound for Africa from Ukraine since Russia’s invasion, according to Refinitiv Eikon data.

Ukraine’s grain exports have slumped since the start of the war because of the closure of its Black Sea ports, which has been driving up global food prices and sparked fears of shortages in Africa and the Middle East.

Three Black Sea ports were unblocked last month under a deal between Moscow and Kyiv, brokered by the United Nations and Turkey, making it possible to send hundreds of thousands of tonnes of Ukrainian grain to buyers.

The Brave Commander, with 23,000 tonnes of wheat aboard, left for Djibouti with supplies destined for consumers in Ethiopia, Ukraine’s infrastructure ministry said.

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And Ukraine can export 3 million tonnes of grain from its ports in September and may in the future be able to export 4 million tonnes monthly, deputy infrastructure minister Yuriy Vaskov said.

He said Ukraine had received applications for 30 ships to come to Ukraine in the next two weeks to export grain, while the total export volume so far was about 600,000 tonnes.

Turkey’s defence ministry said that five ships left Ukrainian ports on Tuesday carrying corn and wheat, three from Chornomorsk and two from Pivdennyi, bringing the total of ships to leave under the deal to 21.

Four more ships, bound for Ukraine, were to be inspected on Tuesday by the joint coordination centre, set up by Russia, Turkey, Ukraine and the United Nations in Istanbul.

But despite unblocked ports, Ukraine’s grain exports are down 46 percent year on year at 2.65 million tonnes so far in the 2022/23 season, the agriculture ministry said this week, and with the end of the conflict looking a distant hope, it is unclear how the production of grain could be affected into next year. 

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