Black Sea Watch: Weekly Ukrainian seaborne grain flows reach fresh quarterly lows

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Seaborne Ukrainian grain flows through the Black Sea slumped another 22% on the week to reach 514,848 mt during the Dec. 12-18 period, with the average cargo size shrinking by 26% on the week to 25,742 mt, an analysis of UN's Black Sea Grain Initiative Joint Coordination Centre data by S&P Global Commodity Insights showed Dec. 19.

"We'll probably see an improvement by February or March," said a shipbroker, pointing to unfavorable weather, harvest delays, and bombing as the major factors pushing weekly Ukrainian grain seaborne exports to the lowest levels observed since August.

The UN-brokered Black Sea Grain Initiative, signed July 22 by Russia, Ukraine and Turkey and renewed earlier in November for another four months starting Nov. 19, enabled the resumption of exports of grains and other foodstuffs from the three key Ukrainian ports of Chornomorsk, Odesa and Yuzhny/Pivdennyi on the Black Sea, with cumulative grain shipments under the safe passage deal reaching almost 14.2 million mt as of Dec. 18.

Declining significantly over the week, the size of the average shipment over Dec. 12-18 reached as low as 25,742 mt, dipping below the August – December weekly average size of 26,336 mt for the first time since early November.

The largest cargo observed during week 50 was a 71,400 mt shipment of wheat headed to Indonesia on Star Emerald, 2019-built, 82,063 dwt, vessel which departed from the terminals of Yuzhny/Pivdennyi Dec. 15.

Similar to last week, corn shipments dominated the Dec. 12-18 flows, accounting for almost 44% of total cargoes, with wheat accounting for almost 32% and sunflower products close to 22%, with the residual flows being soya beans.

Notably, the share of high-income destinations halved to 30% of total shipments over Dec. 12-18, with over 40% heading to upper-middle-income destinations and less than 30% of the shipments reported to be destined for lower-middle-income destinations.

Europe and Central Asia continued to attract the lion's share of the Ukrainian seaborne grain exports, reported at 52% of the cargo volumes during the week ended Dec. 18, with nearly 27% heading to East Asia and Pacific and about 11% destined for the Middle East and North Africa.

The remaining volumes were shipped to South Asia, JCC data showed.

On the back of significant macro-economic headwinds, dry bulk freight rates have remained weak, with the Platts KMAX 9 Index, a weighted average of spot time charter equivalent rates on key Kamsarmax routes assessed by Platts, last standing at $12,811/d on Dec. 16, almost 36% lower than the $19,956/d average for 2022 to date.

Focus on successful JCC inspections

"Since early November, the JCC has been deploying three joint inspection teams, with the exception of one day," said a JCC spokesperson to S&P Global inquiries.

"The UN has requested an increase in team numbers, and the parties have been discussing this as well as how to improve efficiencies in inspections. However, we have not seen an increase yet."

"We hope of course that the situation is going to improve but to see an improvement, the number of successful inspections per day needs to increase, which means the number of joint inspection teams needs to increase, too."

"So, the backlog is predominantly linked to JCC's inspection capacity although bad weather has also contributed to several delays," the JCC spokesperson concluded.

The JCC said late Dec. 18 that "84 vessels are waiting in Turkish territorial waters. Out of those 84, 65 are waiting to move – following inspections – into Ukrainian ports with the capacity to export approximately 2.5 million tons of grain and other food products."

Some of the vessels have waited for over a month, with the remaining 19 vessels already loaded with cargo and awaiting outbound inspection.

According to the JCC, the number of inspection teams has not increased and remains stable at three per day, with plans to conduct 12 inspections Dec. 19, split equally between inbound and outbound vessels.

Platts is part of S&P Global Commodity Insights.

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