The recent increase in global prices for grains and oilseeds is largely driven by the sharp rise in maritime logistics costs. However, this trend brings little additional income to Ukrainian producers, as higher freight rates put pressure on export prices, ProAgro Group reports.
According to Bogdan Kostetsky, market analyst and operating partner at Barva Invest, freight rates on several routes have risen significantly over the past week.
For example, freight to Marmara increased from about $23 per ton last week to around $26, while shipments to Mersin are currently estimated at approximately $29 per ton.
The most notable increase has been observed in the coaster vessel segment.
“If last week freight for meal shipments to Poti was estimated at around $35–36, now we are talking about roughly $50. In other words, freight increased by about $15 within a week,” Kostetsky explained.
According to him, such a rapid increase may temporarily reduce the economic attractiveness of the coaster market and potentially limit access to certain export destinations.
“The impact of higher freight is paid by the importer, but it does not significantly increase revenues for producers or exporters. As long as buyers are not ready to pay more than what higher freight forces them to, the entire negative effect of rising logistics costs falls on FOB and domestic prices in Ukraine,” he noted.
Under current conditions, buyers are willing to pay around $224 per ton FOB for Ukrainian corn, while domestic prices are forming at approximately $214 per ton.
Additional pressure on the market comes from Iranian washouts and active selling by Turkish traders who still hold significant grain stocks. As a result, part of the market has shifted into a wait-and-see mode.
“Producers are watching the current price levels but are not actively selling. At the same time, multinational traders are also taking a cautious approach while reassessing their strategies,” Kostetsky said.
At the same time, the expert noted that global markets continue to receive support from exchange prices and nominal support at the CIF level. However, further growth in freight costs may continue to limit price increases for Ukrainian grain.
“If the purchase price on a CIF basis rises by $5, but freight increases by the same $5, domestic prices effectively gain no room to grow,” he concluded.
Earlier it was reported that the Black Sea freight market has recently entered a new period of uncertainty, as military developments in the Middle East have pushed bunker fuel prices higher, forcing shipowners to revise freight ideas upward.
