Russia and Ukraine lose grain exports as wheat prices surge

Attacks on ports and ships in the Black Sea have struck at grain exports from Russia and Ukraine, sending wheat prices sharply higher and narrowing the routes available to both exporters.

Data cited by the Polish Economic Institute, or PIE, show that attacks on port infrastructure and vessels in July and August damaged terminals and halted a significant share of grain shipments. Ukrainian authorities estimate that Russian strikes on ports in Odesa and along the Danube left Ukraine exporting 1.6 million tons of wheat from Aug. 1 to 28. That represented 20% of its potential and about 40% of the volume exported during the same period a year earlier.

Ukrainian drone attacks on the Russian port of Novorossiysk also reduced Russian wheat exports. SovEcon analysts estimated a 56% year-on-year decline. Russia exported 1.6 million tons in the first month of the season, its lowest August total since the 2017-18 season, PIE said.

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Ukraine is seeking alternative export channels.

Russia and Ukraine account for roughly one-third of global wheat exports, making disruptions in their shipments visible in international prices. The FAO grain price index averaged 113.8 points in July, up 6.9% from a year earlier. In August, wheat futures on the Chicago Board of Trade rose about 30% year on year and reached their highest level in more than three years.

Ukraine is seeking alternative export channels. During the Black Sea port blockade in 2022 and 2023, it redirected some shipments to Danube ports and Romania’s Constanța, while sending other cargo by land to the European Union. PIE said low water levels on the Danube and attacks on infrastructure near Moldova now limit those routes’ ability to replace lost capacity. Ukraine is also seeking more transit through Poland and other regional countries, as well as the lifting of an embargo on imports of wheat, corn, rapeseed and sunflower seeds.

PIE experts said land routes cannot maintain the export levels previously handled by Black Sea ports. Russia has been hit especially hard by damage to Novorossiysk, which handled one-third of its grain exports. Some shipments can move through Baltic ports, overland routes and ports in EU Baltic states, but those alternatives cost more and take longer, particularly because Egypt and Turkey are the main buyers of Russian wheat.

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Russians can only partially redirect grain exports to other ports, mainly Baltic ones, partly to land routes, and also to ports in the Baltic EU states.