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(Bloomberg) — Despite everything, Ukraine is on the verge of striking a deal to bring to life the very important Black Sea grain exports that have been crippled by the Russian invasion. But getting them through won’t be easy.
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An agreement is expected to be signed on Friday through representatives from both countries, which may encourage shipments from one of the world’s leading exporters of wheat, corn and vegetable oil. This would be good news for a tight world food market and for the Ukrainian economy that has been destroyed by war.
However, even once the deal is signed, it will take a while for investors and officials to restart flows. Ukraine faces the task of clearing a path in the mined seas, locating enough ships to transport the grain it expects, and diverting the trains and trucks now in use. elsewhere. Getting insurance for canopy operations is also a challenge.
The plan’s good fortune also depends on Moscow’s security promises and President Vladimir Putin respecting its percentage of the deal, at a time when the Kremlin is preparing to annex occupied lands and continues to advance in eastern Ukraine. Western analysts and officials are skeptical about how temporarily Ukraine will be to resume its role as a global agricultural power.
“While active military operations are being positioned on the territory of Ukraine, being in the waters of Ukrainian ports will remain incredibly dangerous,” said Andriy Kupchenko, head of research for local representative APK-Inform. “Grades this season,” he said.
In a sign of the tension of the situation, an adviser to President Volodymyr Zelenskiy’s chief of staff said Ukraine would signal an agreement with Turkey and the United Nations, which directly with Russia, with Russia reflecting an agreement with Turkey and the UN. He also said Ukraine would not allow escorts from Russian ships or have their representatives in Ukrainian ports.
Dozens of collection vessels have been trapped in Ukraine since the start of the war, forcing the country to resort to rail and road routes and river ports, which can handle much smaller volumes. When Black Sea ports reopen, insuring ships and locating insurers willing to back up shipping going there can be complicated and expensive.
Specialist insurers can take care of the cargo, especially given its humanitarian nature, said Neil Roberts, head of marine and aviation at Lloyd’s Market Association. the grain.
“Opening the ports would be fantastic, at least the 80 or 90 or 90 ships stuck there can get out,” Lucas Dorrestein, global head of operations at crop trader Viterra, said this week. “But then the next steps will be Complicated. “
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Ukraine had up to 25 million tons of grain by the middle of the year and farmers are now in the midst of their next wheat harvest. Although some materials are in or near ports, farmers and investors will want safe routes to continue deliveries. the southern region remains harmful and infrastructure has been damaged, which may restrict progress, Kupchenko told APK-Inform.
In addition, many cars and trucks are stuck in lines to export grain to the European Union’s neighbors and are expected to return to classic roads to the port, he said.
Maintaining exports is also based on making sure there are no attacks on infrastructure through Russia, which has been accused of stealing Ukrainian grain and attacking garage services with missile attacks. Some Kremlin officials intend to use the risk of food shortages and world hunger as a negotiating tool.
The expected agreement concerns the creation of safe corridors from the ports of Odessa, Chornomorsk and Pivdennyi, Tass reported on Friday. They accounted for just over a portion of Ukraine’s maritime grain exports in the 2020-21 season.
There are others who are also about to reach pre-war volumes. One is Mykolayiv, near Kherson, where intense fighting is concentrated lately, while Chornomorsk is blocked by intentionally sunken ships.
The International Maritime Organization estimated that the total elimination of seamines near ports would take months. However, clearing a path to allow the transit of ships can be much faster, which could take about 10 days, Mykola Gorbachev, director of the Ukrainian Grain Association, said this week.
“I’m pretty positive,” he said. It is conceivable to locate the way. “
The increase in exports would offer a relief to the countries that count on Ukrainian crops, especially with traditionally high grain prices. – to plant important winter grains like wheat, which are in short supply globally, said Michael Magdovitz, an analyst at Rabobank.
“We hope there can be some sort of arrangement to get that grain out of there,” said John Kirby, a spokesman for the U. S. National Security Council. “In the U. S. , at a press conference. ” But we don’t look at it through rose-colored glasses. “in terms of the good fortune they can eventually achieve. “
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