Black Sea Blockade Threatens Global Food Shock

Disrupted Black Sea shipping is threatening a global food supply shock as Russia’s war against Ukraine blocks grain exports, drives wheat prices higher and forces major importers to seek more expensive alternatives.Combined Russian and Ukrainian wheat exports during the July-to-September harvest period are expected to fall to roughly half last year’s volume, Bloomberg reported on Monday, Sept. 21, citing estimates from agricultural consultancy SovEcon.JOIN US ON TELEGRAMFollow our coverage of the war on the @Kyivpost_official.Russia and Ukraine normally account for more than a quarter of global wheat trade, approximately two-thirds of sunflower oil exports and about one-tenth of international corn shipments.The Black Sea is therefore as important to global wheat supplies as the Strait of Hormuz is to seaborne oil shipments, according to Caitlin Welsh, a food-security expert at the Center for Strategic and International Studies.“The world is underestimating the impact of these attacks,” Welsh told Bloomberg.Attacks drive wheat prices to three-year highsBlack Sea agricultural shipments have fallen sharply since July as attacks on ports, grain terminals, storage facilities and commercial vessels intensified.Ukraine’s ports around Odesa, which ordinarily handle about 90% of the country’s grain exports, have faced repeated Russian missile and drone attacks. Russian exports have also been disrupted by Ukrainian strikes and growing risks to shipping.Wheat prices have consequently reached three-year highs, while war-risk insurance and transportation costs have increased. Other Topics of Interest Russian Ballistic Strikes Hit Dnipro, Kryvyi Rih and Pavlohrad, Kill 4 Industrial facilities were hit in three Dnipropetrovsk region cities, sparking fires as emergency crews responded overnight. Egypt, the world’s largest wheat importer, reportedly received no Black Sea grain for about a month. Russia and Ukraine usually provide roughly half of the wheat imported by Egypt, where about two-thirds of households are entitled to subsidized bread.Egyptian authorities have enough reserves to maintain the subsidy program until February, according to industry representatives cited by Bloomberg. However, the disruption has already raised flour prices and increased pressure on bakeries facing higher energy and labor costs.Importers across Asia, Africa and the Middle East are searching for replacement supplies from France, Romania, Argentina, India, Australia and the Baltic states.The alternatives are often considerably more expensive. One Vietnamese milling company was forced to replace missing Black Sea cargoes with wheat from Bulgaria and the US after four shipments covering about one-fifth of its annual needs were disrupted.Supplies elsewhere are also limited. Drought has affected US wheat and corn production, while heat waves have damaged crops in Europe. Australian traders have reported receiving more inquiries than they can satisfy before the country’s next harvest.Ukraine faces storage and export crisisThe interruption is creating an increasingly serious problem for Ukrainian farmers.Ukraine’s new harvest is filling warehouses faster than grain can be exported, depressing domestic prices and threatening heavy losses for producers. The country’s available grain storage could be filled by early November, forcing some farmers to use temporary plastic silo bags.Agricultural products generate more than half of Ukraine’s export revenue, making the disruption a threat not only to farmers but also to the national budget.Kyiv Post previously reported that only seven vessels entered the ports of Greater Odesa during the first 11 days of August, compared with 169 during all of July.Ukraine’s agricultural sector could lose or delay between $450 million and $500 million in revenue each month while the principal maritime route remains restricted, according to industry estimates.The ports on the Danube and overland connections to the European Union cannot replace Odesa’s deep-water terminals. Approximately 80 mostly smaller vessels have reportedly accumulated near Ukrainian Danube ports as shipping is redirected there.Low water levels have further complicated transportation along the Danube and toward Romania’s Constanța port.Ukraine also has more than a dozen railway crossings with neighboring EU states, but their combined capacity remains limited. Around 180 grain wagons can cross the border daily, carrying approximately 10,000 metric tons – a fraction of the volume that can be transported by sea.Political resistance in neighboring countries presents another obstacle. Several states have maintained restrictions on Ukrainian agricultural imports following protests from domestic farmers, while even the transit of Ukrainian grain remains politically sensitive in Poland.Alternative routes cannot replace the Black SeaRussia is also attempting to redirect grain through Kazakhstan, the Baltic and Caspian seas and ports in the Far East.These routes are longer, more expensive and have significantly less capacity. More than 70% of Russian grain exports normally pass through the Black Sea.Moscow has proposed temporarily suspending grain export duties and subsidizing rail transportation to alternative ports. However, agricultural traders warn that the narrow profit margins on wheat mean higher logistics costs can make shipments commercially unviable.Even if fighting stopped, damaged port and storage infrastructure could take months or years to restore.Dmytro Barinov, head of the Ukrainian Sea Ports Authority’s Ukrport association, said more than 300 vessels had been damaged or destroyed since Russia launched its full-scale invasion.Turkey seeks another grain agreementTurkey is preparing a proposal for an agreement similar to the Black Sea Grain Initiative it helped negotiate in 2022. Ankara is reportedly in contact with both Kyiv and Moscow.President Volodymyr Zelensky has also discussed protecting maritime grain routes with leaders from Turkey, Egypt, Saudi Arabia and the United Arab Emirates, Kyiv Post previously reported.However, no new shipping agreement has been announced, and Russian attacks on Ukrainian ports continue.EU foreign policy chief Kaja Kallas warned that alternative land and river routes cannot replace the amount of grain transported by sea, raising the risk of another worldwide food-security shock.The consequences may continue even if Black Sea shipping improves. Farmers in both Russia and Ukraine are reportedly reducing wheat planting for next year because of falling domestic prices, rising costs and uncertainty over exports.That could restrict global grain supplies in 2027, extending the effects of the current blockade far beyond this year’s harvest.