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First Grain Ship Sets Sail

For the past many weeks, there had been a concern about grain availability in many nations. This was caused by the blockade of ports in Ukraine which is one of the largest grain exporters in the world with a 46% market share in sunflower seeds and 20 million tons of wheat exports.

Last week an agreement was reached between Ukraine, Russia, and United Nations with Turkey as the common link between the two nations in conflict. With this, a positive move was set in motion that led to the first ship set sail yesterday.

Though it is a positive sign for some market watchers it is far from the relief the nations require to ease the shortages of wheat and other grain required to fulfil the demand of this year's end and next year.

Last year in August 194 grain carrying vessels moved from Ukraine with 60% movement from the blocked ports. And currently as per the government it will take one and half months for smooth operations with three weeks of a pilot program. The requirement to move the trapped grains would require at least 350 medium-size ship departures.

Thus, the initial optimism of the markets from this element is not be taken with all is well now theme. The risk of such a large operation in midst of the geopolitical issues is too high to be ignored.

On the end of the spectrum, the consuming nations are facing depleting inventories that have been given some relief from the price rise but the availability problem is still far from resolved.

It is important to remember financial world reacts to the real world in such instances by making sure the risk impact is only factored in when they have occurred and not before.


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