Russia faces shipping concerns for wheat exports amid Black Sea 'chaos'
Russia's agriculture ministry forecasts grain exports will fall roughly 8% this fiscal year from 60 million tonnes in 2022/23.
Russian grain exporters are in a bit of a pickle — they lack ships, and Western grain traders don't want their crops.
After revoking the Black Sea Grain Initiative last month, President Vladimir Putin pledged to replace Ukrainian grain with Russian shipments to Africa.
Eduard Zernin, head of Russia's Union of Grain Exporters, called the relative disinterest a part of "hidden sanctions" that "may lead to an increase in freight and insurance costs" for Russia.
"[This] will be reflected in the price level of wheat and other grains on the world market," he told Reuters.
NATO allies have excluded Russian agriculture exports from sanctions against Russia over its invasion of Ukraine in February 2022.
According to Reuters, the financial and security risks of trading with Russia — compounded by the Black Sea corridor collapse — continue to increase freight costs for Russian shipping operators.
The sources said that unresolved quarrels exacerbated by recent escalations in the Russia-Ukraine war could push global wheat prices higher.
Global commodity houses like Cargill, Louis Dreyfus and Viterra stopped trading for Russian grain on July 1, intensifying pressure on Putin and his cohort.
Russia's agriculture ministry forecasts grain exports will fall roughly 8% this fiscal year from 60 million tonnes in 2022/23.
Zernin claims Russian wheat exports could fall to 45 million tonnes, in line with estimates from the International Grains Council.
"It is not going to be easy for them [Russia]," said one industry executive with knowledge of grains exports.
Despite record wheat exports by Russia last year, the executive said: "There is very little coming out now for international companies."
"Most of what is coming out is dealt with by Russian traders using [shadow] fleet ships [operated by China and others], which international traders would not touch."
Since abandoning the Black Sea Grain Initiative, Russia requested 257 ship operators to assist with their grain dilemma — up 40% from June. It is not known how many of those requests have been fulfilled.
In December, the agriculture ministry announced a plan to build 61 new grain ships amid "the refusal of many international carriers to cooperate with Russia."
Russian exporters need 34-grain ships with a carrying capacity of 60,000 tonnes and 27 with a capacity of 40,000 tonnes, they said at the time.
No orders have been reported for Russian companies either domestically or internationally.
With the Black Sea corridor consumed by chaos, Russia and Ukraine warned that ships destined for their adversary's ports may be treated as 'legitimate military targets.'
In response to Russia bombarding Ukrainian grain storages, Ukraine used naval drones to attack a Russian oil tanker and a warship at its Novorossiysk naval base — next door to a prominent grain and oil port.
Russia's Black Sea terminals handle over two-thirds of its grain exports, including ports in Novorossiysk and Taman ports.
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