Russian wheat exports expected to fall by third due to attacks in Sea of Azov

Ukrainian strikes in the Sea of Azov have paralysed Russian grain exports. Russian exporters are forecast to ship 1.5 million tonnes of wheat abroad in July, a third less than in the same month last year, when the figure stood at 2.1 million tonnes, and half the average for the past five years, which was 3.1 million tonnes.

Source: The Moscow Times, an independent Amsterdam-based news outlet; Latifundist.сom, a Ukrainian agribusiness media portal

Details: Export volumes are expected to be the lowest since 2017, effectively falling back to levels seen a decade ago, as forecast by analysts at SovEcon, an outlet covering agricultural markets in Russia.

Up to 25% of Russia's total grain and sunflower oil exports are now under threat. This is the share shipped through shallow-water ports beyond the Kerch Strait. These ports handle trade with countries in the Middle East and with Türkiye, Russia's largest grain customer, which buys almost a fifth of its exports.

Weak demand from Egypt and Turkish importers is also putting additional pressure on wheat exports.

Because of problems in the Kerch Strait, grain exports via the Don River have now been completely halted. In the previous agricultural season, 14.7 million tonnes of grain and processed grain products were exported abroad via this route, accounting for 27% of Russia's total grain exports.

All elevators at ports on the Don River are full, the Ural-Don holding said. Grain purchases have effectively ground to a halt, new consignments are no longer being accepted and previously agreed export deals are falling through because there is no way to ship the goods out.

The narrow approaches to the ports of Novorossiysk and Tuapse cannot physically handle a surge of rail wagons, while Black Sea ports are not suited to exporting perishable deep-processed products, legumes or durum wheat, The Moscow Times reported.

Meanwhile, Latifundist reported that domestic Russian purchase prices for fourth-class wheat with a protein content of 12.5% at port elevators on the Black Sea and Sea of Azov has fallen significantly in recent days.

By 17 July, Russian media reported that prices had fallen most sharply at the ports of Azov, by 5.8%, and Taganrog, by 9.6%.

Over the week, purchase prices fell to US$166.7 per tonne at the port of Azov, a drop of at least US$10.3 per tonne; US$156.5 per tonne at Taganrog, down US$16.7 per tonne; and US$175.7 per tonne at Rostov-on-Don, down US$1.3 per tonne.

Background:

• Reuters reported earlier that Russia is preparing to reroute grain shipments away from the Sea of Azov following Ukrainian drone attacks on tankers, ferries, tugboats and other vessels. Around a quarter of Russia's grain exports pass through the Sea of Azov.
• It was also reported earlier that Russian shipowners are being denied war-risk insurance amid a growing number of Ukrainian drone attacks in the Black Sea and Sea of Azov.

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