3 more ships with grain depart Ukraine ports under UN deal

Three more ships carrying thousands of tonnes of corn have left Ukrainian ports, officials said Friday, in the latest sign that a negotiated deal to export grain trapped since Russia invaded Ukraine nearly six months ago is slowly materializing. 

But major hurdles lie ahead to get food to the countries that need it most.

The ships bound for Ireland, the United Kingdom and Turkey follow the first grain shipment to pass through the Black Sea since the start of the war. The passage of that vessel heading for Lebanon earlier this week was the first under the breakthrough deal brokered by Turkey and the United Nations with Russia and Ukraine.

The Black Sea region is dubbed the world's breadbasket, with Ukraine and Russia key global suppliers of wheat, corn, barley and sunflower oil that millions of impoverished people in Africa, the Middle East and parts of Asia rely on for survival.

While the shipments have raised hopes of easing a global food crisis, much of the grain that Ukraine is trying to export is used for animal feed, not for people to eat, experts say. The first vessels to leave are among more than a dozen bulk carriers and cargo ships that had been loaded with grain but stuck in ports since Russia invaded in late February. And the cargoes are not expected to have a significant impact on the global price of corn, wheat and soybeans for several reasons.

For starters, the exports under the deal are off to a slow, cautious start due to the threat of explosive mines floating off Ukraine's Black Sea coastline.

And while Ukraine is a major exporter of wheat to developing nations, there are other countries, such as the United States and Canada, with far greater production levels that can affect global wheat prices. And they face the threat of drought.

"Ukraine is about 10 per cent of the international trade in wheat, but in terms of production it is not even five per cent," said David Laborde, an expert on agriculture and trade at the International Food Policy Research Institute in Washington.

The three ships left Friday with more than 52,600 tonnes of corn, but that is still a fraction of the 18 million tonnes of grains that Ukraine says are trapped in the country's silos and ports and that must be shipped out to make space for this year's harvest.

Around six million tons of the trapped grain is wheat, but just half of that is for human consumption, Laborde said.

There is an expectation that Ukraine could produce 30 per cent to 40 per cent less grain over the coming next 12 months due to the war, though other estimates put that figure at 70 per cent.

Grain prices peaked after Russia's invasion, and while some have since come down to their pre-war levels, they are still higher than before the COVID-19 pandemic. Corn prices are 70 per cent higher than at the end of February 2020, said Jonathan Haines, senior analyst at data and analytics firm Gro Intelligence. He said wheat prices are around 60 per cent higher than in February 2020.

One reason prices remain high is the impact of drought on harvests in North America, China and other regions, as well as the higher price of fertilizer needed for farming.

"When fertilizer prices are high, farmers may use less fertilizer. And when they use less fertilizer, they will produce less. And if they will produce less, supply will continue to remain insufficient," Laborde said.