Ukraine's sea ports deblocking means USD 5.5 bln of economic gains: KSE Agrocenter
By the optimistic expectations, the total economic gains from unblocking Ukrainian sea ports will reach USD 5.5 bln. Additional export revenues generated by agricultural products are expected at about USD 14.7 bln or about 30% of total Ukrainian exports under the pessimistic scenario by the National Bank of Ukraine (NBU), KSE Agrocenter reports.
Analysis of the historical values of the price difference (basis) between domestic prices in Ukraine and world prices (futures prices on the Paris exchange Euronext, FOB prices in the Romanian port of Constanța) suggests that after the full unblocking of sea ports, prices may rise by about 150 USD/t.
As noted by experts of KSE Agrocenter, the full-scale launch of regular maritime trade through the deep-water ports of Odesa will come gradually. All the more time is needed for the market and its players to trust the effectiveness and safety of the grain deal.
"We expect that the transshipment volumes in the ports of Odesa, Chornomorsk and Pivdenny will not exceed 2 mln t per month by the end of 2022 (the potential transshipment capacity of these ports is 3.7 mln t per month). Then we can expect an acceleration of exports by contracting large Panamax-class vessels with Ukrainian corn by China," says Oleg Nivievskyi, Vice President for Economics Education at KSE.
The optimistic scenario proposed by the KSE Agrocenter assumes that the increase in domestic prices will be at a level of up to $100/t, that is, the estimated difference in the cost of delivery by sea between Odesa and Constanța\ and the difference in delivery by land to these ports.
"The concluded grain agreement and the first ships with grains, oilseeds and vegetable oil from the ports of Odesa and Chornomorsk give hope that it will be possible to export the leftovers of the last season crop and significant volumes of new one, and thus ease the pressure on the domestic market and prices, improve the financial condition of agricultural producers," says Pavlo Martyshev, an expert of KSE Agrocenter.
The export potential of the 2021 grains and oilseeds crop, which is "stuck" in Ukraine as a result of the sea ports blockage, is estimated at 20 mln t, and the 2022 crop at 35 mln t. Thus, the additional revenue for Ukrainian agrarians from unblocking of ports and the consequent increase in domestic prices is estimated at USD 5.5 bln.
The most realistic is that all of this volume (55 mln t) will be exported during 2022/23. The benefits of sea ports unblocking will be split into an additional 1.63% of GDP in 2022 and 2.24% of GDP in 2023 (from the pessimistic GDP forecast of the NBU).