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Last chance for the grain trade

Последен шанс за търговията със зърно

After the end of the Black Sea deal, various alternatives for the export of grain from Ukraine began to be sought. The country is still seen as a factor in world markets, although the local agriculture ministry said yesterday that the 2023 crop could reach as little as 46 million tonnes of grain, down significantly from record 2021. 86 million tons.

The latest export figures are also raising serious concerns among local authorities. Although Ukraine's grain exports in the first month of the new season increased to 2.16 million tonnes as of July 31, up from 1.61 million in July 2022, more of that volume was realized in the non-existent road through the Black Sea.

And with Ukraine's Black Sea ports now effectively blockaded by Russia, experts say the country will have to rely heavily on its ports along the Danube River to export grain to neighboring Romania. From there it can be transported further, as the Romanian ports remain open.

We recall that one of Russia's latest attacks hit the port of Reni, with missiles falling about 200 meters from the border with NATO member Romania across the Danube.

In the Black Sea, the most extensive damage to port infrastructure was seen in Chernomorsk, where at least two silos were hit on the night of 19 July. Ukrainian authorities report that 60,000 tons of agricultural products were destroyed at the site.

Further south, in areas where Ukraine uses other export routes that bypass the Black Sea, the damage is even greater.

A total of 19 drone attacks on Danube ports were recorded overnight on July 24, hitting Ukraine's main alternative export routes, according to Lloyd's List, a company that tracks global shipping markets.

"With the completion of the grain deal, Ukrainian grain exports will collapse at maximum export capacity by river, truck and rail to around 2.5 million tonnes per month," said Maria Bogonos, an agricultural policy expert at the Kyiv School of Economics.

"Without the Black Sea deal, exports are heading south, but there is a physical limit to how many ships can pass through this narrow river corridor," said Richard Mead, editor-in-chief of Lloyd's List.

Lloyd's List says increased risk at Danube ports has led traders to assess the viability of remaining grain export routes from Ukraine. There are overland routes where grain can be transported by truck or rail, but agriculture experts say it won't be quick or cheap to implement.

"The reason to ship large quantities by water is because it's the lowest cost to ship, so all other routes will add costs to the grain and the price will go up," said Mike Lee, an agricultural expert who focuses on Eastern Europe.

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