Russia and Ukraine signed an agreement with Turkey and the United Nations on July 22, 2022 to allow grain exports from three ports in western Ukraine: Yuzhne, Chornomorsk and Odessa. According to data from BIMCO, an international shipping association, the three ports together accounted for 65 percent of the country's total grain exports in the past five years.

The deal is valid for 120 days with an option to extend, and it will allow bulk carriers to be escorted to ports via a secure corridor, the update added. "To create a navigable passageway, the sea mines will be removed from the corridor, a process that is expected to take one to two weeks."

“With this deal, the UN hopes to increase monthly grain exports from Ukraine by five million tons,” said Niels Rasmussen, Chief Shipping Analyst, BIMCO. “But as these three ports have never handled such a large amount of grain in the past five years, achieving this goal could be challenging. Even as port logistics accelerate to accelerate exports, the need to keep ships in and out of the ports will probably cause some congestion."

More than 20 million tons of Ukrainian grain is ready for export, and the Grain Traders Union (UGA) expects about 25 million more tons to come from the 2022 harvest, the report said. With the wheat harvest underway and the maize harvest starting in September, rapid grain exports are needed to ensure space in the silos for the new crops.

“A major obstacle for Ukrainian grain exports is travel risk and associated insurance premiums. To make the shipment of Ukrainian grain attractive, high tariffs are needed to limit risk-related costs,” says Rasmussen. "Russia's recent missile strikes in ports such as Odessa will add to the insecurity and uncertainty of operating in the Black Sea."

Due to the limited global supply of wheat and maize, a return of Ukrainian grain to the world market would have a positive effect on the Panamax, Supramax and Handysize segments, the report said.