Ukraine suspends new grain corridor due to threat from Russian side

Ukraine suspended its use of the new Black Sea grain corridor due to threats from Russian aircraft on 26 October.

Source: Barva Invest consulting company with reference to Ukrainian Sea Ports Authority (USPA)

Quote: "The USPA published a notice on the evening of 25 October that the movement of vessels to and from the corridor will be suspended from 26 October 2023," Barva Invest noted.

The Barva Invest reported that this de-facto suspension has been in effect for the past two days due to the decision made by the military, who referred to the "explosive threat" that arose as a result of increased Russian aircraft activity.

The ban will be in force on 26 October, early reports show.

"The current ban is applied until 26 October, but it could be extended," Barva Invest reported.

Barva Invest also mentioned the possible consequences of suspending the grain corridor.

"These unexpected restrictions mean downtime for vessels. We expect a negative reaction from business due to the lack of predictability. Market participants who are currently paying their own money for downtime, will include these risks [in their pricing] and transfer additional costs down the logistics chain during further activity in Ukraine," Barva Invest predicted.

"As a result of such activity, as always, the manufacturer will feel this at the purchase price level," the message said.

Background: In October, three Ukrainian Black Sea ports reopened to vessels for grain exports, despite Russia’s threats to target ships heading to Ukrainian ports.

On 25 October, Operational Command Pivden (South) reported that Russian tactical aircraft became more active in the area of the sea trade route over the Black Sea. In particular, the Russians dropped four explosive devices.

On 25 October, the Ukrainian Grain Association announced numerous reports from grain market participants that vessels loaded with grain for export are being unjustifiably detained in the ports of Greater Odesa, causing "colossal losses" to farmers.

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