Ukrainian grain crushed again by blockades on two fronts Ship’s crew

By Deana Kjuka, Aine Quinn and Daryna Krasnolutska (Bloomberg) —

Ukraine’s grain exports are under renewed threat as shipments from the Black Sea are halted while some of its European Union neighbors stop importing their cargoes.

Kiev said on Monday Russia has blocked inspections of ships under a key safe-passage deal, the second time in a week that the corridor has come to a standstill. This comes as Poland, Hungary and Slovakia have banned imports of Ukrainian grain in recent days over fears the supplies will affect their domestic markets.

It’s a setback for Ukraine, which, as it faced maritime difficulties following the Russian invasion, sent some cargoes through its EU neighbors by rail, truck and river. Port export and EU transit problems would make it much more difficult for Ukraine to supply developing countries and generate vital foreign exchange earnings, while threatening to push up global crop prices.

At the moment, traders don’t seem too worried as deliveries from the new season are still a few months away. Benchmark wheat futures traded in Chicago are up 0.3%, reversing earlier losses but remaining within ranges seen over the past few weeks.

Ukrainian agribusiness HarvEast is already feeling the effects of the bans. Negotiations on a new contract with a major customer in Slovakia were broken off after the country announced restrictions, CEO Dmitry Skornyakov said in an interview.

“It’s not that critical for most farmers now because it’s the end of the season and most of the crop has already been sold, but if this continues into the summer it will be very, very difficult for us to survive,” he said . HarvEast ships about 60% of its products through Black Sea ports – including the Corridor – and 40% by rail and road across Europe.

Slovakia said that although it has not set a date for the end of the import ban, Ukraine can still transport its grain through Slovak territory. Poland and Hungary banned Ukrainian agricultural imports without specifying what this means for the transit of goods through their countries.

The three eastern EU states’ import bans underscore the split in the bloc’s efforts to support Ukraine. Member states have expressed dissenting opinions on issues such as arming Kiev, banning Russian energy imports and helping the war-ravaged country export food that helps feed millions in developing countries.

Poland and other neighboring countries had agreed to help Ukraine – a major grain supplier – move its cargoes through their territory after Moscow’s invasion last year temporarily blocked exports from the Black Sea. But some of this supply is now piling up in Eastern Europe. That puts pressure on local farmers as global grain prices have plummeted from last year’s peak.

The EU at the weekend slammed Poland’s and Hungary’s decisions to ban imports from Ukraine, saying “unilateral action” was unacceptable and a potential violation of the bloc’s trade policy. The governments of Hungary and Poland accuse the EU of responding too slowly to the plight of farmers there.

Ukrainian Deputy Prime Minister Julia Svyrydenko will join a government delegation due to arrive in Warsaw on Monday for talks to resolve the grain glut, Polish commercial broadcaster RMF FM reported on its website, without saying where it got the information from.

inspections stopped

Ukraine’s infrastructure ministry said Russian inspectors in Istanbul had “unilaterally stopped the registration of vessels that submit to Ukrainian ports to draw up an inspection plan” for cargoes in the Black Sea. That means no inspection plan has been drawn up, the ministry said.

Inspections were too briefly stopped last week, and Russia has hinted that it could end the initiative if its issues are not resolved by mid-May. The threat underscores uncertainty over the export deal, which was key in bringing the world cost of food down from records set in the wake of the Russian invasion.

The joint coordination center in Istanbul, which oversees the inspections and houses teams from Ukraine, Russia, Turkey and the United Nations, did not immediately respond to a request for comment. The United Nations said last week there were conflicting views over Ukraine submitting lists of ships to be inspected.

The “Grain Initiative is threatened with closure,” said Ukrainian Infrastructure Minister Oleksandr Kubrakov. “This is yet another Russian attempt to dictate to the world its policy of compromising food security and using food as a weapon.”

According to Denys Marchuk, deputy chairman of the Ukrainian Agrarian Council, Kiev expects that transit restoration agreements will be reached for Ukrainian cargo transported through the EU.

–With the support of Michael Winfrey, Olesia Safronova, Piotr Skolimowski and Veronika Gulyas.

© 2023 Bloomberg LP

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