Cargill-chartered ship ‘hit by a projectile’ amid Ukraine invasion while port shutdown disrupts grain supplies
- Ukraine has suspended commercial shipping at its ports, stoking fear of supply disruption from leading grain and oilseeds exporters
- Shipper Maersk has halted all port calls in Ukraine until the end of February and closed its main office in Odessa on the Black Sea coast
Global farm commodities trader Cargill said an ocean vessel it chartered was “hit by a projectile” on the Black Sea on Thursday. The ship remained seaworthy and all crew were safe and accounted for.
The incident occurred offshore from Ukraine after Russia launched an invasion of the major grain-producing country where Cargill operates an export terminal.
Ukraine’s has suspended commercial shipping at its ports, an adviser to the Ukrainian president’s chief of staff said, stoking fear of supply disruption from leading grain and oilseeds exporters. Main grain ports include Chornomorsk, Mikolayiv, Odessa, Kherson and Yuzhny.
Russia earlier ordered the Azov Sea closed to the movement of commercial vessels until further notice, but kept Russian ports in the Black Sea open for navigation, officials and industry sources said. Ukraine is a major exporter of corn, much of it destined for China and Europe. It also competes with Russia to supply wheat to global buyers.
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Industry estimates currently put Ukraine’s grain exports at about 5 million to 6 million tonnes a month, comprising about 4.5 million tonnes of corn, 1 million tonnes of wheat and a remaining share of mainly barley.
Egypt’s state grains buyer cancelled an international purchasing tender for wheat on Thursday amid reports that no offers of either Russian or Ukrainian wheat had been received.
Russian forces invaded Ukraine on Thursday in a massed assault by land, sea and air, the biggest attack by one state against another in Europe since World War Two.
“The market is still struggling to get a clear picture of the actual situation on the ground,” one European grain trader said. “The ports in the Azov and Black Sea so far seem not to have been damaged according to the initial shipping agency reports.”
Shipping group Maersk said on Thursday it had halted all port calls in Ukraine until the end of February and had shut its main office in Odessa on the Black Sea coast because of the conflict.
Global agricultural commodities trader Bunge said it had closed company offices in Ukraine, while operations in its Black Sea grains port in Nikolaev, Ukraine, had been suspended. Competitor Archer-Daniels Midland said its Ukraine facilities, including an Odessa export terminal, were not operating.
Russia, the world’s largest wheat exporter, mainly ships its grain from ports in the Black Sea. The Azov Sea’s ports are shallower and have less capacity.
Mariupol, one of the biggest Ukrainian ports in the Azov Sea said to be under attack, mainly handles relatively small ships of between 3,000 to 10,000 tonnes deadweight. The Azov Sea ports export wheat, barley and corn to Mediterranean importers including Cyprus, Egypt, Italy, Lebanon and Turkey.
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Another European trader, speaking on condition of anonymity, said such countries would have to seek alternative supplies if the ships were unable to depart in the near future.
US wheat futures rose to the highest level in nearly a decade 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 per cent of global wheat exports, 19 per cent of world maize (corn) exports, and 80 per cent of world sunflower oil exports.
Russia produced 76 million tonnes of wheat last year. The US Department of Agriculture expects it to export 35 million tonnes in the July-June season, 17 per cent of the global total. Turkey and Egypt are the biggest buyers of Russian wheat.
Ukraine asked Turkey on Thursday to close the Bosphorus and Dardanelles straits to Russian ships, the Ukrainian ambassador to Ankara said. President Tayyip Erdogan said he backed Ukraine’s territorial integrity but there was no immediate response to Kyiv’s request.
Under the 1936 Montreux Convention, Ankara has control over the straits and can limit the passage of warships in wartime or if threatened.
