A renewed challenge to Wheat logistics

The attacks on logistics infrastructure across Sea of Azov and Black Sea has paralyzed the shipping in the region. At the peak harvest time, Russia will face enormous challenge to move its cargo solely from the Black Sea ports, while Ukrainian shipments will also face severe challenges to load from Odessa and other Black Sea ports.

Nearly a quarter of Russian grain moved through the sea links, which are now closed and the closure, if prolonged, will make the Black Sea ports rationalize shipments. The berths are already booked for weeks in advance and shipping additional grain from Black Sea ports will be difficult. Russian shipment pace for grains will be short by more than a million tonnes per month, if Sea of Azov remains closed.

Ukrainian flow out of the Black Sea route is also restricted and the volume this quarter will face a decline. The Ukrainian exporters will find it difficult to regain the shipment pace, even if the attacks slow down, as the damage to infrastructure will take many months to be rebuilt.

What it means for Wheat?

Wheat availability will be reduced for the current quarter, and the importing nations, which have relied on just-in-time shipments, are likely to push prices higher to get the grain for their populace.

Not just the cash prices, but shipping and insurance changes are also moving higher, lading to a sharply higher landed cost.