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EU “Could Provide Alternative Routes” for Ukrainian Grain- Expand “Solidarity Lanes”

Financial Times writers Andy Bounds and Ian Johnston reported yesterday that, “The EU could provide alternative routes for almost all of Ukraine’s grain exports following Russia’s decision to stop their passage through the Black Sea, the bloc’s agriculture commissioner said.

“Janusz Wojciechowski said on Tuesday that the EU should expand its ‘solidarity lanes’road, river and rail links first established in 2022 after Russia’s full-scale invasion of Ukraine — to enable more food from Ukraine and Moldova to transit to EU ports for onward shipment to Africa and Asia.

“‘We are ready to export by solidarity lanes almost everything Ukraine needs [to send] . . . about 4mn tonnes a month. We achieved this volume in November 2022,’ he told a press conference in Brussels after a meeting of agriculture ministers.”

The FT article noted that,

The EU solidarity lanes currently carry about 60 per cent of Ukraine’s grain exports, with the remaining 40 per cent going via the Black Sea.

Bounds and Johnston pointed out that, “Since the war began in February 2022, 41mn tonnes of grain, oilseeds and related products have left Ukraine through the solidarity lanes, compared with 33mn through the Black Sea.

“Wojciechowski also said the commission would next month discuss a request by Poland, Bulgaria, Hungary, Romania and Slovakia to extend trade curbs on Ukrainian grain imports. The five frontline states say a glut of the crop has depressed prices for their own farmers and exhausted storage space — although the Polish farm commissioner said much had now been moved on.

“They lifted an import ban after the commission agreed that Ukrainian shipments of five types of grain would only transit through the countries en route to other destinations.”

Meanwhile, Reuters writers Michelle Nichols and Julia Payne reported yesterday that, “Britain warned on Tuesday that it has information indicating Russia’s military may start to target civilian shipping in the Black Sea, while the European Union pledged to help Ukraine export almost all its farm produce via rail and road.”

The article noted that, “‘Our information indicates that the Russian military may expand their targeting of Ukrainian grain facilities further, to include attacks against civilian shipping in the Black Sea,’ Britain’s U.N. Ambassador Barbara Woodward said on Tuesday.”

Nichols and Payne also explained that, “The European Union said on Tuesday it is ready to export almost all of Ukraine’s farm produce via road and rail ‘solidarity lanes‘ through neighbouring EU countries and help cover transportation costs.”

And today, Bloomberg News reported that, “President Volodymyr Zelenskiy said a Wednesday meeting of the new NATO-Ukraine Council at the level of ambassadors will discuss the security of Ukrainian grain exports and Black Sea ports.”

More broadly, Reuters writers Max Hunder and Jonathan Saul reported yesterday that, “Russian air strikes on Ukrainian grain facilities on the Danube this week threaten a vital river route for Kyiv’s exports, as Moscow seeks to tighten the noose around a key sector of the economy days after abandoning the Black Sea shipping deal.

Last week, air strikes caused tens of millions of dollars of damage to the grain sector in Odesa region, and Monday’s strikes on infrastructure along the Danube brought back memories of the export gridlock that followed Russia’s February 2022 invasion.

“‘Without the Danube, the export (situation) becomes critical. To do it with just land routes is a very small amount. We’d be going back to the beginning of the full-scale invasion,’ said Denys Marchuk, deputy head of the Ukrainian Agrarian Council.

“‘We have no other way to work. If the Black Sea is closed, the Danube is one of the main routes which we will need to use,’ he told Reuters by phone.”

The Reuters article added that, “‘The big question mark is whether Russia will continue to attack these ports in the near future and prevent exports,’ said Carlos Mera, head of Agri Commodities Markets Research at Rabobank.

“Since Monday’s air strikes, the Danube channel has seen shipping disruptions, although it was unclear why there was a slowdown of vessel traffic.

“There continued to be a bottleneck, with a buildup of ships at anchor, queuing to take their turn in port, or moving slowly across the Danube channel on Tuesday, according to Reuters calculations based on ship tracking data from analytics company MarineTraffic.”

Also yesterday, Bloomberg writer Eric Martin reported that, “Global grain prices could increase as much as 15% after Russia pulled out of a deal that allowed Ukraine to safely ship its grain through ports on the Black Sea, the International Monetary Fund’s chief economist said.”

Elsewhere, Reuters writer Naveen Thukral reported today that, “Chicago corn futures lost more than 1% on Wednesday and soybeans extended losses, as U.S. forecasts for much-needed rains eased concerns over yield losses after recent hot and dry weather conditions.

Wheat slid 2%, after rallying to a five-month high on Tuesday following Russia’s attacks on Ukrainian ports and grain infrastructure that raised concerns about global supplies.”

“Wheat in Chicago retreated after hitting a five-month high on Tuesday as traders weigh signs of ample supplies against tensions in the Black Sea.” (“Ukraine Recap: NATO-Ukraine Council to Discuss Black Sea Ports,” Bloomberg News (July 26, 2023)).

Thukral noted that, “Wheat prices rallied earlier this week after Russia destroyed Ukrainian grain warehouses on the Danube River in a drone attack, targeting a vital export route for Kyiv in an expanding air campaign that Moscow began last week after quitting the Black Sea grain deal.”

Keith Good Photo

Keith Good is the Farm Policy News editor for the farmdoc project. He has previously worked for the USDA’s National Agricultural Statistics Service, and compiled the daily News Summary from 2003-2015. He is a graduate of Purdue University (M.S.- Agricultural Economics), and Southern Illinois University School of Law.

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