Russian deep sea ports to raise fees amid huge crop estimates: sources

Russia’s deep-sea ports are set to increase their handling fees from October amid bumper crop expectations, sources told Agricensus Thursday.

The NZT, NKHP and KSK terminals - the largest in the Novorossiysk export hub on the Russian Black Sea - will increase their grain elevation costs by $3/mt starting from October 1, according to traders and sources close to the matter.

“From October 1, terminals will raise the transshipment rate by $3/mt,” a trader based in Russia said.

Confirmation from the terminals was not provided by time of publication.

An increase of this magnitude would add about 20% to the current transshipment rate that is $15-16/mt on average but varies depending on the company or terminal.

Terminals anticipate a potential increase in grain shipments given higher crop outlooks - and the opportunity to boost profit margins.

This has already shown up in export prices. For October loading, offers have jumped to $208/mt, which is an increase of at least $3-4/mt on offers for September loading.

“[But] demand is very low - there are no offers due to [expectations about a forthcoming] port costs announcement increase in Russia,” a second trader said. “The market is trying to show higher prices today due to these +$3/mt port costs, but no one is paying.”

Russia has planted its biggest ever wheat area this year, prompting local agencies to raise their estimates for the total crop in recent weeks. The highest is from IKAR, which forecasts production of 82 million mt.

Exports continue, albeit they are 9% behind where they were at this time last year - as of August 14, they were 5.3 million mt, including 4.3 million mt of wheat, according to official data.

Around this time in 2019, Russia’s deep-sea terminals had lowered their grain-handling fees by around $7/mt to reflect the slow pace of exports and the low volumes going through the Novorossiysk ports.

NKHP, largely owned by the bank VTB, has transshipment capacity of around 6.5 million mt per year; NZT, which is 100% owned by the bank, has capacity of around 6.3 million mt per year

KSK, which is 75% owned by Deloports and 25% by Cargill, has grain-handling capacity of around 3.5 million mt per year.