When Grain Trade Is Obstructed: Black Sea Disruptions and Global Market Impacts

Hello, everyone.

I'm Alexander Karabaitsev from the International Grains Council, and I will be setting the scene today for our discussions.

And I will be focusing on the recent developments and IGC forecasts for the global wheat market.

Let me just share my screen.

So disruptions in shipments from Russia and Ukraine have been the focus of the global market in recent weeks, and indeed shipments from both Russia and Ukraine from the Black Sea and Azov seaports have been severely disrupted and reduced since mid July, following intensified attacks on port infrastructure and commercial vessels.

Both countries have been redirecting flows via alternative routes, but the estimates are that these routes can cover only up to one half of these displaced Black Sea and Azov Sea volumes.

So, as an immediate consequence of these disruptions, there have been concerns about farmer margins, about potential decline in 27-28 plantings because of reduced export opportunities and increasing logistics costs and also seasonal increase in supplies and limited export opportunities have been raising concerns about storage capacity, particularly in Ukraine.

And so far, no durable maritime ceasefire has been established despite continued diplomatic efforts.

And just if we look at the market reaction and where we stand in terms of prices, this is the IGC grains and oils index, and this is the subindex for wheat, which represents average FOB prices across major export origins.

And as you can see, we have been in an uptrend in average prices pretty much since the start of 2026.

The initial support would stem from increasing energy prices, increasing crude oil prices, marine fuel prices, and fertilizer prices, which also provided support to wheat values.

But then this trend was exacerbated by these disruptions since mid-summer.

So we reached, in early September, we reached a three-year high, but still As you can see, we are well below the peaks which we saw in 2022.

For example, in May in 2022, we reached a 14-year high, and now we are about 40% below that level.

So in terms of where we stand now, the increase year-on-year is about one-fifth in average prices.

It's around 20%.

But perhaps more notably, the increase since the mid-summer, since the mid-July disruption, is around 8%.

Or if we incorporate new prices from the Russian Baltic ports, which are higher than the previous values from the Black Sea region, we will get an increase of around 10%.

which is much smaller than many participants have anticipated.

And in my next slides, I will try to explain why this is happening.

Perhaps one of the major reasons why we haven't seen a broad-based market rally so far is because there are still lingering hopes that there will be a ceasefire, that there will be a de-escalation.

And reports suggest that Russia, for example, may relatively quickly restart its shipments and recover the bulk of its lost capacity in recent weeks.

So one of the reasons also when we look at these relatively small changes in recent weeks, we need to look at the freight prices as well.

Because apart from commodity prices, freight prices have also increased very significantly.

And that was linked in part to the escalation in the Middle East and rising crude oil prices and marine fuel prices.