Ukraine crisis could bring serious grain trade disruption

Cтатья посвящена возможному негативному эффекту на мировую торговлю зерновыми культура политического кризиса, разразившегося в связи с военным присутствием России на Крымском полуострове, в который втянулись Украина, Российская Федерация, Соединенные Штаты Америки и Европейский Союз. В статье содержится всестороннее и глубокое исследование множества аспектов и сегментов международной торговли, причем один из выводов – это усиление позиций зернового экспорта из США на фоне осложнений в черноморской торговле зерном.

What kicked off as a protest concerning a trade pact with the European Union, quickly escalated into a full on political crisis involving Russia, the E.U. and the U.S.A. The presence of Russian troops in the Crimea peninsula has ignited the jump of commodity prices last week and some people in our industry have already started wondering whether acceleration of the crisis would affect the freight market as well. As big scale political tensions always push for commodity restocking and with the grain trade in the Black Sea being only a couple of months away from kicking off, good and bad scenarios of how these developments could impact on shipping are in the making. But what are we realistically dealing with here? This was the prevailing question of Intermodal’s latest monthly report, compiled by Research Analyst Eva Tzima.

According to her, “Ukraine’s location is of key importance on the global chess board. The country is the biggest frontier market between Russia and the E. U. Russia depends on Ukraine to flow its natural gas to the West and Ukraine depends on the heavy discounts it achieves on Russian natural gas, a dependence of much greater importance. At the same time, Europe itself currently gets almost 40% of its natural gas from Russia. E.U. leaders have gathered yesterday for an emergency summit and as it’s being reported some of the Eastern Europe members are pressing for firm sanctions against Russia, while Germany appears to support stronger efforts for mediation”.

She added that “whatever one might believe should happen, the blunt truth is that with the E.U. being Russia’s number one import partner, the economic ties between the two sides are so close that placing sanctions would definitely hurt both. From one side, the EU is still dealing with anaemic growth, mending its own woes caused by the financial cri-sis, which means that it would be directly opposed to its own interests to alienate one of its top trading partners. Germany itself is very much reliant on Russia to satisfy its energy needs and taking into account Germany’s powerful position of influence within the E.U., one cannot simply see steep trade or other sanctions materializing”, Tzima noted.

At the same time, Russia itself would probably not want this crisis to drag on much longer, as the cost to its economy, while uncertainty still prevails, is not trivial. “On Monday alone the central bank of Russia was forced to raise interest rates by 150 points to support its falling currency. While the Ruble was plummeting, so were Moscow’s main stock indexes, with the market valuations of most of the companies on the Moscow Exchange left to the mercy of the tur-moil. In the light of a further sell-off, the Russian President, in an effort to calm down the markets, was quick to assure that force against Ukraine would only be used as a last resort . Back in 2008 a similar story unfolded between Russia and Georgia, also known as the Five-Day War. The quick resolution with a cease fire agreement is a good indication of what might happen this time as well”, said Intermodal’s analyst.

She went on to warn that “if the crisis isn’t resolved soon there are a couple of areas that will have an immediate impact on shipping. The first, as expected involves the LNG trade. If the Russian natural gas supply is threatened (Russia has during past disputes cut off the supply to Ukraine) LNG prices should move up immediately. If there is such development it is not expected to last long. Russia has started shaping its “European face” for a while now. And although the economic power of the country is undeniable, so are its efforts to protect those hard gained ties with Europe and the rest of the world. On the grain trade side, there have been talks that US grain might become more popular should the Black Sea trade is impeded. Currently both P&I clubs and big agricultural houses assure that the main trans-shipment area – ports Odessa, Ilyichevsk and Yuzhny work without any interruptions and that the same holds for Crimean Ports Kerch, Theodosia and Sevastopol.
There are rumours that farmers are holding back shipments but even if this is the case, it will take another couple of months before the trade in the Black Sea is flooded with Ukrainian and Russian cargoes, so the time frame is not as tight and allows for both the crisis and fears to de-escalate. We are in fact already watching CME contracts for corn and wheat erasing most of their recent gains as investors have revaluated the situation”, Tzima noted.

She concluded by noting that “the current turmoil in Ukraine, the outcome of which is not yet clear, has come to remind us that black swans are ever present and by definition never predicted, and no matter where you find yourself when the ball stops rolling, the reality is that instability caused by events like this creates insecurity and fear in the markets overall. Will this be one of the times that crisis creates “opportunity” or one of the times that diplomacy beats crisis? I would think, and for obvious reasons hope, that it will turn out to be a case of the latter”.

Автор: Nikos Roussanoglou, Hellenic Shipping News Worldwide


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