Commodities and Futures News

Russia warns ships in Black Sea, Ukraine to create temporary grains export route

2023.07.19 20:38


© Reuters.

(Reuters) – Russia warned that ships sailing to Ukraine’s Black Sea ports from Thursday will be seen as potential military targets, days after its withdrawal from a safe-passage deal that threatens to worsen global food supplies.

Ukraine said on Wednesday it was establishing a temporary shipping route via Romania, one of the neighbouring Black Sea countries.

“Its goal is to facilitate the unblocking of international shipping in the north-western part of the Black Sea,” Vasyl Shkurakov, Ukraine’s acting minister for communities, territories and infrastructure development, said in a letter to U.N. shipping agency, the International Shipping Organization.

The year-old pact brokered by the United Nations and Turkey to provide safe passage for cargo ships from the war zone ended after Russia’s withdrawal on Monday. The last ship left Ukraine on Sunday.

Ukraine and Russia are among the world’s top grain exporters. U.S. wheat futures jumped 8.5% on Wednesday, their biggest daily gain since days after Russia’s Feb. 24, 2022, invasion of Ukraine.

Russia’s Defence Ministry said flag states of ships travelling to Ukrainian ports would be considered parties to the conflict on the Ukrainian side from midnight Moscow time (2100 GMT on Wednesday).

Russia attacked the Odesa region on Monday and Tuesday nights. Grains terminals and an industrial facility, warehouses, shopping malls, residential and administrative buildings and cars were damaged on Tuesday night, Ukrainian officials said.

Ukraine’s southern military command said Russia had used supersonic missiles, including the Kh-22 that was designed to take out aircraft carriers, to hit Odesa’s port infrastructure.

The Odesa region’s three ports were the only ones operating in Ukraine during the war under the grain deal that allowed Ukrainian grain exports safely through a Russian blockade of ports.

“In the ports that were attacked there was about a million tonnes of food stored,” Ukrainian President Volodymyr Zelenskiy said in his nightly address on Wednesday. “It is precisely that amount that should already have been delivered to consumer countries in Africa and Asia.

“In the terminal damaged the most from Russian terror tonight, 60,000 tonnes of agricultural products were stored, intended for shipment to China,” he said.

U.S. officials have information indicating Russia laid additional sea mines in the approaches to Ukrainian ports, said White House National Security Council spokesperson Adam Hodge.

“We believe that this is a coordinated effort to justify any attacks against civilian ships in the Black Sea and lay blame on Ukraine for these attacks,” he said.

There was no immediate response from Russia on the U.S. assertion.

Russian President Vladimir Putin accused Western countries of “perverting” the U.N.-backed deal formally called the Black Sea Grain Initiative.

The International Monetary Fund on Wednesday said Russia’s exit from the deal threatens to worsen global food insecurity and could increase food prices, especially in poor countries.

Putin said Russia would immediately return to the pact if all its conditions for doing so were met for rules to be eased for its own exports of food and fertiliser. Western countries call that an attempt to use leverage over food supplies to force a weakening in financial sanctions, which still allow Russia to sell food.

NO LETUP IN FIGHTING

Ukrainian officials reported no letup in fighting in areas of eastern and southern Ukraine where the army is pressing on with a counteroffensive it began in June to try to reclaim territory occupied by Russian forces. The Russians have dug into a heavily-fortified front line.

Valery Shershen, spokesperson for the southern front, told national television that Ukrainian forces advanced in two areas in order to reach ports on the Sea of Azov and sever the land bridge created by Russian forces between the east and Crimea, the Ukrainian peninsula annexed by Moscow in 2014.

Reuters could not independently verify the battlefield reports of either side.

In Washington, the Pentagon announced additional security assistance for Ukraine, totalling about $1.3 billion, with the package including air defence capabilities and munitions.

In Brussels, European Union foreign ministers are expected to discuss a proposal on Thursday to spend up to 20 billion euros ($22.4 billion) on weapons, ammunition and other military aid for Ukraine over four years.

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