So many wrong takes on the Black Sea graindeal. Here’s what you need to know if you trade #wheat (and #corn) as of today:
Odesa shipments are over. The chance was high that the Kremlin would stop the grain deal and show everyone that they should stay away from Odesa. We gave a heads-up about such a scenario last week after the first light attack on Odesa and Putin’s angry interview (the market/media missed that – everyone was watching the NATO forum).
Despite what the media/politicians are telling you, Odesa shipments are not a game-changer now. Ukraine can ship 40+ mmt of grain via other routes, and that more or less matches their 23/24 export potential.
Other export routes are the Danube and via land to the EU. The almost-forgotten Danube has been expanding rapidly since the start of the war. In recent weeks for the first time, they loaded two handysize ships (17K)
Is the Danube safe? We don’t know. Russia threatened all vessels in the Black Sea going to Ukrainian terminals, so that could potentially include ships going to the river. Some vessel owners are cautious and prefer not to send ships there currently, but overall the navigation is still active, and local traders are actively buying at CPT Reni/Izmail/Kilia.
Potential attack on the Danube terminals could be a game-changer. Watch this carefully. Is it likely to happen? The chance is not negligible but low, the Kremlin clearly doesn’t want to mess with NATO, and Romania is very close. What is concerning is that Russian propagandists, who were happy about the Odesa attacks, are now starting to talk about the Danube.
Potential escalation could come from the Ukrainian side. We do doubt that they would openly attack vessels going to Russian ports, but some attempts to disrupt the shipments are possible (ie more attacks on the Crimean bridge impacting Russian shipments from Azov…or Novorossiysk). If something big happens here, we could see a rally similar to Feb-Mar 2022….Russia has almost 50mmt+ of wheat to ship.
A potential path to de-escalation? It also exists….we will be watching Erdogan. We do believe that Moscow and Ankara discussed the end of the grain deal some time ago – Ankara clearly wasn’t surprised. We also know that Erdogan still likes the deal and has a lot of leverage over Moscow.