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First Ukrainian Grain Shipment Explained: First grain cargo ship has left Ukraine since war began — how big a deal is this?

First Ukrainian grain shipment sails through Istanbul: Ukraine is India's major supplier of sunflower oil. Shipments were impacted after the Russian invasion, and even though the UN-brokered deal will help, corn and wheat have priority over sunflower oil.

On Monday, a Sierra Leone-registered ship, ‘Razoni’, carrying 26,527 tonnes of corn (maize) set sail from Ukraine’s Odesa port. This was the first time since Russia’s invasion on February 24 that any vessel loaded with Ukrainian grain had departed from its ports on the Black Sea. The bulk carrier, destined for Tripoli in northern Lebanon, passed through a specially-cleared “safe humanitarian maritime corridor” near Ukraine’s ports on the Black Sea, whose waters it had mined in order to protect against amphibious attacks by Russia.

How significant a milestone is this shipment? Is there anything beyond symbolic value?

The M/V Razoni ship, which anchored near the Bosphorus entrance off Turkey’s coast on Tuesday and was cleared for further voyage after inspection, is the first under a United Nations-backed agreement enabling resumption of Ukrainian farm produce exports through its Black Sea ports. The so-called Black Sea Grain Initiative – involving signing of separate accords by Russia and Ukraine with the UN and Turkey on July 22 – provides for exports from three ports: Odesa, Chornomorsk and Yuzhny. Under the deal, the ships are to be guided through the Black Sea waters by Ukraine’s navy to avoid mined areas. The vessels will then proceed to Turkey’s Bosphorus Strait along an agreed corridor and, from there, to various ports of the world. The ships are to also be inspected (to ensure only commercial foodstuffs and fertiliser are carried) by teams from a Joint Coordination Centre set up in Istanbul with representatives of the UN, Ukraine, Russia and Turkey.

As far as effectiveness goes, everything hinges upon the agreement’s smooth implementation in the midst of a war that’s showing no signs of ending. Obviously, the more the successful voyages conducted, the more the confidence it will instill among exporters, importers, vessel owners and insurance companies indemnifying the carriers and cargoes. For now, the resumption of maritime exports from Ukraine – there are about 17 other ships in the three designated ports with already loaded grain and “waiting permission to leave” – seems to have created some optimism. Since Friday, prices of wheat at the Chicago Board of Trade commodities exchange have fallen from $296.79 to $280.63 per tonne. So have corn, from $242.61 to $232.86 per tonne.

Ukraine, before the war, was the world’s fifth largest exporter of wheat (after Russia, European Union, Australia and the US) and barley (after Australia, EU, Argentina and Russia), while No. 4 in corn (after the US, Argentina and Brazil); No. 1 in sunflower oil, oilcake/meal and seed; and No. 2 in rapeseed (after Canada).

Post ID: 1cc3dd50-be4e-4854-a8eb-f9bfa93ecf94
Rating: 1
Updated: 2 days ago
Mumbai, Mahārāshtra

Seattle, Washington
Member since Feb 2021

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