Over the past two weeks, nervousness and caution have intensified in the grain market. Some producers are trying to sell grain at the western border or agree to deliveries to inland elevators even at lower prices, despite more attractive port quotations. Recent attacks on port infrastructure may further worsen market sentiment, ProAgro Group reports.

A reduction in supply on the CPT/DAP port basis is expected, along with risks of partial non-fulfillment of already signed contracts. Ports are forced to adapt operations to security threats, which may lead to restrictions on grain accumulation and transport.

In particular, during the latest blackout, the Port of Odesa operated at only about one-third of its capacity and still relies heavily on generators. Despite this, traders are obliged to fulfill previously signed export contracts, increasing the risk of logistical bottlenecks.

According to analysts’ estimates, before the escalation of attacks in December, the monthly handling capacity for bulk cargoes (grains, oilseeds, and meals) stood at around 4.0–4.2 million tonnes. Strikes on port and railway infrastructure have already reduced these volumes by 500–600 thousand tonnes per month, with similar losses possible in road logistics. Overall, port capacity may shrink by at least 25%.

Against the backdrop of a significant lag in exports compared to seasonal averages, the risk of accumulating unsold stocks is growing. This could put additional pressure on prices in the second half of the current season and at the beginning of the next one.

As reported earlier, the ports of Pivdennyi, Odesa, and Chornomorsk are currently operating at minimal levels, prompting Ukrainian corn sellers to redirect shipments toward the western border.

Source: Barva Invest