Moving grain, first trade ship leaves Ukraine’s port since war started

01 Aug 2022 --- The Razoni, a merchant ship under Sierra Leone’s flag, has sailed from Odessa this morning carrying 26,000 metric tons of corn, according to the UN. The ship is navigating following the lead of a Ukraine authorities vessel following an intrinsic path to avoid mine-plagued waters. The Russian Navy has granted safe passage and the long-awaited move signals an easing of the global food crisis.

A secure trade passage dubbed the ‘Safe Humanitarian Maritime Corridor’ sees much-needed grain finally move out of Ukraine where it has been trapped for months - becoming a symbol of Russia’s conflict with Ukraine and how the war has been impacting vital food supplies around the world.

The corridor will be scrutinized by Ukrainian, Russian, Turkish and UN authorities to enable safe transportation of grain and fertilizers from three Ukrainian ports in the Black Sea.

Russia bombed Odessa’s port days after reaching a deal, raising concerns trade would not restart.

The ship was marooned since February 18, before the start of the war, and will finally be able to reach its destination of Lebanon after passing through Turkish ports tomorrow. 

Lebanon will welcome some extra grain supply as the country is currently under severe inflationary pressures, with food inflation hovering over 1,000% since late February, according to the World Food Programme.

The first ship will transport 26,000 metric tons of wheat from Ukraine to Lebanon. June’s official data figures put the nation’s annualized inflation at 210% and food inflation at 332%, according to Lebanon’s government numbers.

Lebanon’s silos exploded in Beirut’s port explosion two years ago; without the possibility to store grain, the country is vulnerable to market price fluctuations.

Furthermore, Lebanon imported 80% of its grain from Ukraine and Russia before the war started, making up 35% of the population’s caloric intake.

Trapped wheat
Twenty million metric tons of grain are awaiting transportation in Ukrainian silos; the situation is time sensitive as the August harvest is ongoing, and storage must be emptied to make capacity. Otherwise, the wheat will perish. 

Before the war started, Ukraine moved five million metric tons per month, the lion’s share through sea routes.  

According to the Food and Agriculture Organization of the United Nations, Ukraine exported 322,000 metric tons in March, 970,000 in April, 1.2 million in May and over 1 million in June, as land routes have proven to be logistically ineffective.

Wheat prices reached an all-time high this May but eased 4.1% in June, with the grain deal giving some optimism of further price relief. Cereal prices, however, remain 27.6% higher than last year.

North Dakota boom year
Further easing wheat prices around the globe, North Dakota, a US state that makes about half of the US spring wheat crop, has had a considerable production of 49.1 bushels per acre, due to good weather and adequate moisture, according to the Wheat Quality Council (WQC).

“Around 90% of the state’s land is used for crop farming and cattle ranching with about 24 million acres of cropland. On average, North Dakota producers plant about 7.5 million acres of wheat with production totaling 320 million bushels,” according to the WQC.

The good harvest in North Dakota offers some relief to farmers who had a poor crop in 2021, where production was almost half of the crop this year (29.5 bushels per acre).

Romania and Hungary wheat yields downTwenty million metric tons of grain are awaiting transportation in Ukrainian silos.
Meanwhile, bad wheat yields in Romania have resulted in a projected 25% fall in yields compared to last year, according to the Romanian Farmers Club, an organization formed by over 1,000 of the country’s farmers. 

According to the European Commission (EC), Romania produces 10% of the EU’s wheat. 

Hungary’s agriculture ministry says they harvested 3.9 million metric tons of autumn wheat and 1.4 million tons of barley. Down from 5.3 million metric tons last year due to severe droughts, a similar case to the one in Romania.

A blasting heatwave has scorched crops in Europe and North America with notable impacts on the harvest. The three crops that make up half of the food supply is increasingly vulnerable to droughts.

The EC has cut its crop prospects due to the heatwaves across countries, with wheat production expected to be down 4.9% from 2021.

“Apart from direct impacts on growth, drought and heat stress in several regions coincided with the flowering stage, resulting in reduced flower fertility,” explains the Commission.

“Negative impacts on the yield potential of summer crops are most pronounced in regions that were already affected by long-lasting rain deficits, such as large parts of Spain, southern France, central and northern Italy, central Germany, northern Romania, eastern Hungary, and western and southern Ukraine,” the Commission notes.

The EC decided to delay the implementation of some CAP rules to boost cereal production and plug the critical trade gap causing food insecurity worldwide.

By Marc Cervera