(NDAgConnection.com) – Russia is struggling to export its record wheat crop, just as the opening of a safe corridor supports an uptick in shipments from the country it invaded just over six months ago.
Bloomberg News reports that shipments from Russia in July and August, the first two months of the new season, fell 22% to 6.3 million tons from a year earlier, according to ship lineup data from Logistic OS. Last month, Ukraine restarted shipments, exporting 1.5 million tons of food through the grain corridors established under a deal brokered by the United Nations and Turkey.
“We have reputational risk or informal sanctions,” Dmitry Rylko, general director of Moscow-based institute IKAR, said in an interview. “They cause problems with finding vessels for Russia Black Sea, and we see some banks don’t want to open letters of credit for wheat of Russian origin.”
Since the start of the new season, Russian shipments are no longer constrained by an export quota that was in place for the second half of the previous season to protect domestic supplies. Now the government is complaining about restrictions on trade, even after the EU and US stressed that food is not targeted by sanctions.
“Despite the statements made by Washington and Brussels that anti-Russian sanctions do not apply to food and fertilisers, the blocking obstacles to bank settlements, insurance and transportation of goods that have arisen as a result of their introduction still remain,” Russia’s foreign ministry said last week.
Russian farmers are also reluctant to sell wheat as a strong ruble and high export tax make it less attractive, while IKAR said some European customers weighted their orders to earlier in the year.