Russian attack highlights danger to Ukraine’s last grain export route Ship’s crew

By Aine Quinn, Kateryna Choursina and Daryna Krasnolutska (Bloomberg) –

Wheat and corn prices rose after Russia attacked one of Ukraine’s largest Danube ports, raising risks for Kiev’s last major grain export route and global food trade.

A drone attack hit the Danube port of Reni overnight, according to people familiar with the matter who wished to remain anonymous because of confidential information. Ukraine’s Southern Operational Military Command previously said on Facebook that a grain hangar in a Danube port had been destroyed, without giving any further details or details.

September wheat futures for delivery rose as much as 8.6% on Monday in Chicago, extending gains of more than 5% last week. December corn contracts rose as much as 5.6% to the highest level in nearly a month.

Along with Izmail, Reni is one of the largest river ports in Ukraine for grain and is located on the Danube on the border with Romania. In response to the Russian naval blockade, local traders had expanded their capacities there.

The attack was the latest in a series of moves by Russia to suppress Ukrainian exports, which have historically been a major contributor to the world’s food supply. Last week’s failure of the Black Sea Grains Agreement, which blocked Ukraine’s sea corridor, and subsequent Russian attacks on the port of Odessa raised expectations that Kiev will have to redouble its alternative routes, with the Danube being the most obvious.

While it is unclear to what extent the attacks will affect Reni’s exports, the strikes increase operational risks. Seven people were injured in a nighttime Russian drone attack on port infrastructure in the Odessa region, Gov. Oleh Kiper said on Telegram. Five of them were hospitalized. Reni is in this region.

A spokesman for AP Moller-Maersk A/S, which has some assets in Reni, said a small number of containers at the yard suffered minor damage but operations had resumed.

Romania said a grain elevator, fuel depot and cranes were damaged by the Russian drone attack on Reni, while air defenses repelled an attack on Izmail. Security and surveillance measures have been tightened to ensure smooth trade on the Danube, Defense Minister Angel Tilvar told a local TV station.

The amount of crops transported along the Danube reached 2.2 million tons in May, up almost 900,000 tons from the end of last year. Those shipments outpaced exports via the Black Sea Corridor in May as inspections slowed freighter departures. The Danube is too dry in the heatthereby reducing the capacity.

Russia also unleashed a fresh barrage of rockets against Odessa over the weekend, the biggest in a string of almost daily attacks on the Black Sea port city after Moscow pulled out of the grain deal.

“These ports are Ukraine’s best hope for exporting its grain and oilseeds,” said Rabobank analyst Carlos Mera. “We assume that Ukraine could export up to 2.5 million tons of grain and oilseeds per month through these ports. That would be enough to export most of its exportable surplus. But at the moment it is unclear how much damage will be done and whether Russia will carry out more attacks in the future.”

Russia is trying to make it “difficult” for Ukraine to export grain across the Danube, Ukraine’s Agriculture Minister Mykola Solskyi said in an interview with Bloomberg TV last week.

–With support from Olesia Safronova, Christian Wienberg, Irina Vilcu and Gerson Freitas Jr..

© 2023 Bloomberg LP

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