Logistical problems have negative impact on Black Sea grain competitiveness


This season total grain export capacity of RUK countries (Russia, Ukraine and Kazakhstan) exceeds 90 MMT, which is 10 MMT more than last year. However, doubts occur whether the countries will be able to sell this grain volume in the world market. Logistics and quality has become the main problem for exporters.

Logistics has been always a drawback for Kazakhstan – no access to sea limits export capacity of the country. However, the fact that deep-water ports availability is not a panacea for export sales from Russia and Ukraine in one of the main characteristic feature of the current season.

Last week Russian agricultural community started gradual lowering of grain export estimates. Some companies did it carefully – by 0.3-0.5 MMT, some experts –by 3-4 MMT at once. In general, export expectations went down, mainly due to following reason: strong national currency, difficulties with high-quality grain purchases in the domestic market. And logistics was the most important question.

In theory, export capacity is the same as port handling capacity – 40-42 MMT. In practice, it’s not this way. In late October Novorossiysk port had to suspend grain loading due to unfavorable weather conditions. This fact, along with other objective reasons, resulted in significant reduction of grain shipments from Russia.

barley export russiaMoreover, in the months to come weather risks will increase, as we approach winter. Small ports provide up to 40% of Russian grain exports and have a number of advantages, such as low handling rates, possibility of direct loading, etc. However, in winter frost limits their functioning.

Currently, projects for expansion of existing port capacities and building new ones are being implemented in Russia, but these objects will come into play later, not this season. Besides, in November-December Russia has to increase shipments, in particular to supply grain to Egypt under GASC tenders.

At the same time Ukrainian port capacities are 10 MMT higher than those in Russia. However, there are certain difficulties regarding grain delivery...

Full version of the article is available to subscribers for weekly ag market report “Black Sea Grain & Oil” and “Online market review” by UkrAgroConsult.

More information on grain handling capacities in ports is available in UkrAgroConsult report "Grain handling capacities in Ukrainian ports".

Will Russia maintain leadership in the export market in future, given the current trend of port industry development? UkrAgroConsult is going to answer this question in a new market study “Russia: Record crop vs Grain-handling capacities deficit”.




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