Cold Weather Delays Black Sea Wheat Exports

There have been long delays in exports of wheat from Black Sea ports due to heavy snow and cold weather in the growing regions and this is preventing any further fall in prices despite ample supplies, trading executives said Wednesday.

“Shipments scheduled for January spilled over to February and those for this month into March,” said an exporter based in Ukraine.

He was one of numerous traders from around the world who have gathered here for a two-day international conference on grains that begins Thursday.

Many shipments have been delayed by anywhere between one and one-and-ahalf months and several hundred thousand tons of exports have been affected, said another trader.

He said some contracts have been washed out and others are being shipped out with penalties being paid by sellers.

There has been regular snowfall for the past two months. “Due to snow there were shipment delays in the first week of February but the situation has improved now,” said a Novorossiysk-based grains transport agent attending the Singapore conference.

He said more such delays can’t be ruled out until the end of March due to the possibility of further adverse weather.

Novorossiysk is one of Russia’s largest grain exporting ports and has large volumes lying in silos for shipment.

The delays come at a time when Black Sea countries—Russia, Ukraine, Kazakhstan—are saddled with more than 22 million tons of wheat and are aggressively pushing for export sales.

The Black sea region is expected to export 32 million tons of wheat in the year to May 2010 and delays of even a few days can affect shipments of several hundred thousand tons.

Traders said due to cold weather water froze along many ports and made loading of cargoes difficult.

“Problem was not limited to loading alone; transportation of wheat from inland regions to the ports became impossible,” said an exporter who deals with wheat of Black Sea origin.

The exporter said weather has improved in the past few days and traders are trying to clear the lag in shipments in both Russia and Ukraine.

The delays particularly hampered shipments from Ukraine which exports most of its cargoes in containers unlike Russia, which deals more with wheat in bulk.

“In case of containers, if a cargo misses out on its shipping vessel, the trader has to wait for the next round of shipment while for bulk vessels traders can load, halt and resume operations depending on the weather,” said the Ukraine-based exporter.

Traders said with shipment schedules gone awry, availability of containers is also a problem and has pushed up the freight rates.

Although physical wheat prices fell in the past few weeks the higher transportation costs mean Ukraine is still offering containerized wheat for March shipment to southeast Asian destinations at $228-230/ton, basis cost and freight — the same price as a month earlier.

Source: CME Group