UN officials say efforts to revive Ukraine’s agri-commodity exports have already helped stabilise prices for grains, cereals and oils, with nearly 3 million tonnes of cargo leaving Black Sea ports since the first successful shipment last month.

122 vessels left the ports of Chornomorsk, Odesa and Yuzhny between August 1 and September 12, the most recent date for which the UN provides detailed data, carrying corn, wheat, sunflower products and other goods to buyers in Europe, Africa and Asia.

Another seven departed the following day, according to Amir Abdulla, UN coordinator for the Black Sea Grain Initiative – a July agreement brokered by the UN and signed by the governments of Ukraine, Russia and Turkey.

“We’re close to the 3 million [tonnes] mark,” Abdullah told reporters at an online news conference on September 13. “Hopefully we’ll do that [in] the next day or so. There are some efficiencies that we probably need to try and introduce if we can, but if we hold at those levels, we’re more or less in line with [expectations] for this part of the agreement.”

So far, the most commonly exported good under the initiative has been corn, with 53 shipments carrying nearly 1.5 million tonnes. 32 shipments have carried 620,000 tonnes of wheat products, and another 28 shipments have carried 330,000 tonnes of sunflower oil, seeds and meal, UN data shows.

The most frequent destination market is Turkey, with 48 shipments delivering corn, wheat, sunflower products, peas and soya beans, though importing countries include Egypt, Kenya, Lebanon, China and India, as well as several EU member states.

The success of the initiative so far is expected to be seen as a boost to trade finance and insurance providers hoping to revive agri-commodity trade flows from the Black Sea.

Ukraine’s ports had been subject to a blockade by Russia since its invasion in February, leaving millions of tonnes of goods stranded in warehouses and exacerbating international concerns over food security.

As well as restoring Ukrainian exports, UN official say evidence is emerging that the initiative is helping stabilise the cost of food, which have been subject to rampant inflation driven in part by skyrocketing raw commodity prices.

“The deal to export foodstuffs from Ukraine has helped bring down the prices of grains, cereals and oils,” the UN Conference on Trade and Development (UNCTAD) says in a statement issued this week.

The initiative “is reintegrating much-needed grains to global markets and contributing to bringing down prices of basic staples across the world”, it says.

A food price index maintained by the UN’s Food and Agriculture Organization (FAO) shows that in August, commodity prices declined for the fifth month in a row.

Although cereal prices remain over 11% higher than in August 2021, they dropped 1.4% compared to July, thanks in part to the “resumption of exports from the Black Sea ports in Ukraine for the first time in over five months of interruption”. The drop also reflects seasonal patterns, with harvests continuing in the northern hemisphere, FAO says.

Abdullah said during yesterday’s press conference that as prices have fallen, some countries that have been “hoarding grain and hoping to sell it at a high price” are now putting more out on the market.

“Hopefully that will bring some of those local prices down,” he said.

Meanwhile, vegetable oil prices fell by 3.3% from July to August, and are now lower than this time last year. FAO attributes the drop to resumption of sunflower oil exports from Ukraine, as well as greater availability of palm oil from Indonesia.

Overall food prices dropped by nearly 2% from July to August, and are around 8% higher than in August 2021, FAO says.

“The UN will continue to work with all parties of the initiative to reintegrate Ukraine’s agricultural supplies as well as the food and fertiliser produced by Russia into world markets – despite the war – to better tackle the global food crisis,” UNCTAD says.


Ongoing risks

The Black Sea Grain Initiative has drawn criticism from Russian President Vladimir Putin. In a speech last week, Putin said that “practically all the grain exported from Ukraine is sent not to the poorest developing countries but to EU countries”, as well as Turkey.

“It may be worth considering how to limit the export of grain and other food along this route,” he said.

UN logs of the 122 shipments show that 43 were to EU member states, meaning that around 75% of voyages have delivered to the EU or Turkey.

But James O’Brien, sanctions co-ordinator at the US State Department, says the significance of the initiative is because it sends a signal to Ukrainian farmers that the UN World Food Programme – so far the main buyer of grain under the initiative – is a reliable purchaser of goods they produce.

“Now they know they can plant wheat for next year because the major buyer is back in the market,” he told the Financial Times last week.

For commercial lenders and insurers, trade in Ukrainian grain remains fraught with uncertainty. Research by maritime intelligence company Windward and professional services firm Ince, published this week, warns that the International Group of P&I Clubs is currently restricting coverage for certain trades “due to unclear and ambiguous guidance from the EU”.

This will likely increase restriction of legitimate Russian trade, it says, adding: “Unfortunately, the counterbalance to this will be a likely rise in illegal and illicit activity.”

Shipments of allegedly stolen Ukrainian grain have sparked concern among banks, shipping companies and insurers, exacerbated by warnings from Swiss federal prosecutors that facilitating such trade “could constitute a war crime”.

“Commodities traders should, therefore, proceed with caution to avoid inadvertently greenlighting illicit trades or getting themselves involved with prohibited partners,” Windward and Ince say.

Commodity traders that fail to exercise due diligence “may start to encounter difficulties in sourcing owners willing to undertake such voyages”, as well as “increasing restrictions in obtaining trade finance and of course both P&I and [hull and machinery] cover”.