Barge supply tightens in Ukraine's shallow water ports as corridor fears rise

Ukrainian shallow water ports are facing a shortage of barges for transshipment of grains from Ukraine to the Romanian port of Constanta amid further signs that the growing uncertainity over the extension to the Black Sea grain deal is forcing traders into options that are seen as less risky, trade sources have told Agricensus.

The transshipment of grains via barges from Ukraine's shallow water ports in the south of the country is one of the main ways that the trade moved volumes out to deep sea ports after the Russian invasion began in February 2022.

A naval blockade and military attacks meant that all Ukraine's primary export capacity was forced to close, but the shallow water ports allowed traders to move agricultural products to Romanian ports to be loaded onto bigger vessels or to offer Ukrainian grains on a FOB Constanta basis.

The trade has continued even after Ukrainian deep sea ports were re-opened back in early August with the signing of the grain export deal - although most players switched back to Odesa, Chornomorsk, and Pivdennyi as the shipment was more cost effective as long as the export corridor functioned normally.

However, since the queue of vessels waiting for inspection has continued to grow since October, and with the upcoming expiry of the existing deal now barely a month away, the trade has again turned to safer options as it braces for further disruption.

As such, loading grains from Ukrainian ports like Reni and Izmail, along the River Danube, has created increased demand and as such there is a shortage of available barges.

"Constanza becomes more and more important, most buyers want execution via Constanza or POC, but with guaranteed execution," a broker said, referring to the collective term for Pivdennyi, Odesa and Chernomorsk.

Artificial

Some trade sources have also said that they feel the shortage has been created artificially, as some owners just don't want to offer barges and are waiting until February 24 at least, as they expect a ramp-up in military activity across Ukraine as the first anniversary of the invasion comes up.

Others barge owners are already asking for much higher prices compared even to the previous week, with prices also heard to have increased from around $30/mt last week to stand at $38-40/mt this week.

The news comes as the rate of grains moving to Constanta picks up, but the rate of discharging in the port is not going as fast as is needed, leading to potential delays and queues that are also sucking up more of the available supply of barges.

"The problem is not the barges but slow discharging in Constanta. If [big players] did not take the barges as floating storages, it would facilitate the flow a lot," a second broker said.

At the same time, despite trade sources saying that there is definitely bigger demand for grains loaded from Romanian ports, prices have held more or less stable, with corn offers still showing at around $303-308/mt FOB CVB - a level that has been prevalent for a few weeks already.

Meanwhile, trade sources have also said that the situation is temporary, and as soon as the arrangements around the grain corridor deal become clear again - and the deal is extended - trade will slowly come back to Ukrainian deep sea ports.