The one certainty about the Ukrainian-Russian war is that there is little certainty. Even with Russia’s recent history of aggression, few predicted outright war.
Then, when it came, no one predicted Russia would so badly misplay its opening gambit. And who could have foreseen a former television comedian rallying his outmanned, outgunned citizenry to meet every bloody challenge and, incredibly, reverse the field on the invaders?
Past events suggested that the next big event would also be a surprise but — surprise! — it was just Vladimir Putin being Vladimir Putin: he pulled out of the Black Sea grain deal to keep an estimated 40 million metric tons of 2023 Ukrainian grain from the world’s 600 million hungry.
He then sent missiles to destroy much of Odesa’s export infrastructure to ensure the world received his mad message.
By itself, however, the closing down of “Odesa shipments,” tweeted Andre Sizov, a 27-year veteran of the Black Sea grain trade, “are not a game changer. Ukraine can ship 40+ mmt of grain via other routes.”
One of the “other” routes Sizov pointed to July 21 was a Ukrainian “Danube port” on the Black Sea’s northwestern shore. Then, surprise, Russian drones bombed that port, Reni, too.
The July 24 action took guts because the bombed side of the river is Ukraine; the other side Romania, a NATO ally that, had it been hit, would have likely required a military response by the U.S.-led, 31-nation security group.
News of the drones, destruction and export delays lit global grain markets on fire. Corn, the soy complex and wheat went up and down and then back up.
Some of the move’s energy came from continued dryness throughout much of the grain-producing Midwest. Most, however, arrived courtesy of Russia’s attacks on Ukrainian ports.
But Russia, noted Sizov, “has much to lose, too” if Ukraine rises to the challenge — as it has for 17 months now — and retaliates by attacking Russian shipping.
Right now, “Russia has almost 50 mmt of wheat to ship” to finance its war. Like the Ukrainian grain, it too is waiting for a ride.
Also, any increase in attacks on Russian shipping imperils its economic lifeblood, oil exports. Experts estimate that 43% of all exported Russian oil is shipped through the Black Sea, mostly on Greek-flagged tankers.
Any move by anyone in that arena carries repercussions — marketwise, political and military — that few want to consider.
Five days after the first Putin action, European Union ag ministers met to develop a plan to move the mountain of now-stuck Ukrainian grain through its border-sharing member nations — Poland, Romania, Bulgaria, Hungary and Slovakia — and into key markets in Africa, the Middle East and Asia.
It’s not a new idea — it was used to move some of the 2022 Ukrainian crop into the world market — but it’s not very popular, either.
In fact, two months ago, on June 5, the European Commission, the body that oversees EU trade policy, said it would extend its current rule that allowed the five border nations to “restrict Ukrainian grain” flowing through their nations.
What’s more, the commission allowed the same five to outright ban sales of Ukrainian wheat, corn, rapeseed and sunflower seeds in their countries. Any new deal now will be met with quiet derision, not boisterous unity.
“The road and rail routes through neighboring countries have stirred anger from local farmers faced with a glut of Ukrainian grain that has driven down prices and hurt their livelihoods,” ABC News reported July 25.
It’s not great for Ukrainian farmers, either. Shipping delays and higher transportation costs mean lower farm prices and smaller profits for the already war-weary group.
In the meantime, unsurprisingly, Russia keeps raising the stakes. When EU ag ministers suggested Ukrainian grain exports might be diverted through Baltic ports in Lithuania, a Russian spokesman said, sure, go ahead and try it. Be forewarned, he added, “We will continue to counter that.”
What does that mean? The chances are good that not even Vlad the Invader knows, but it’s certain that the threat to global commodity markets is far from over.