Ukraine shuts down ports as conflict threatens grain supplies

Moscow – Ukraine’s military has suspended operations at its ports after Russian forces invaded the country by land and sea, an adviser to the president’s chief of staff said on Thursday, as concerns grew about the flow of supplies from one of the world’s top exporters of grains and oilseeds.

Russia had earlier suspended movement of commercial vessels in the Azov sea until further notice, but kept Russian ports in the Black Sea open for navigation, its officials and five grain industry sources said.

Russian President Vladimir Putin authorized “a special military operation” against Ukraine on Thursday to eliminate what he called a serious threat, saying his aim was to demilitarize Russia’s southern neighbor.

“The market is still struggling to get a clear picture about the actual military situation on the ground. The ports in the Azov and Black Sea so far seem not to have been damaged according to the initial shipping agency reports,” one European grain trader said.

“The next stage which will have to be faced is any declarations of force majeure, if ships simply cannot be loaded and contracts cannot be fulfilled,” the trader added.

Russia, the world’s largest wheat exporter, mainly ships its grain from ports in the Black Sea.

The Azov sea is home to shallow water ports of smaller capacity.

Maripol, the most important Ukrainian port in the Azov sea, mainly handles relatively small ships of between 3,000 to 10,000 tons deadweight.

The Azov sea ports mainly export wheat, barley and corn to Mediterranean importers like Turkey, Italy, Cyprus, Egypt and Lebanon.

“These countries would be compelled to seek alternative supplies if ships are stuck and cannot depart in the near future,” another European trader said.

Wheat prices in Chicago rose to the highest level in 9-1/2 years on Thursday as the conflict threatened to disrupt the flow of supplies from the region while European wheat futures climbed to a record peak.

Russia and Ukraine account for 29% of global wheat exports, 19% of world maize supplies, and 80% of world sunflower oil exports.

Russia produced 76 million tons of wheat last year and is expected by the U.S. Department of Agriculture to export 35 million tons in the July-June season, 17% of the global total.

Russia supplies wheat to all the major global buyers. Turkey and Egypt are the largest importers.

Ukraine asked Turkey to close the Bosphorus and Dardanelles straits to the Russian ships, the Ukrainian ambassador to Ankara said earlier on Thursday.

There has been no reaction yet to Ankara’s request.