Miller Magazine Issue: 152 August 2022

MARKET ANALYSIS 98 MILLER / AUGUST 2022 Turkey will be one of the hubs for grain from Russia and Ukraine. Turkey's pragmatic and high-intelligence strategy has positioned Ankara well to be the influential mitigator. Financial considerations also play a role in the Kremlin's motivations, as the sale of grains and fertilisers will be a significant source of income for Putin's war chest in the face of the impending EU oil embargo and the substantial discounts Moscow must offer to Asian customers, among other factors. While not formally a part of the Istanbul process, US and EU efforts to lessen sanctions risks and clarify procedures for transactions on Russian grain and fertilisers for shippers, insurers, bankers, etc. are ongoing in parallel and have been a Russian prerequisite. It's crucial to remember that money from grain and fertilisers will go to some influential figures in Russian government. Finally, beyond grain exports, Moscow still has a variety of sharp weapons in its toolbox for waging its geoeconomic war against the West, with gas being the most potent. All bullish factors seem to have been exhausted at first glance, and the market is encouraging bearish sentiment: • The strongest dollar since 2002 was clearly deflation- ary; • Brazil harvests a huge crop of safrinha; • Agreements were signed in Istanbul, which should increase the volume of exports of Ukrainian and Russian grain. Meanwhile, Russian Foreign Minister Sergei Lavrov, during a visit to Cairo on Sunday, offered assurances about Russian grain supplies to Egypt amid uncertainty over a deal to resume Ukrainian exports from the Black Sea. Ukraine made efforts to restart grain exports from its Black Sea ports as part of a grain deal brokered by Turkey and the UN a day earlier, but warned that supplies would be hurt if a Russian missile attack on Odessa was a sign of something more. On Thursday, July 28, the first technical wiring from the port of Chornomorsk is scheduled. However, shipowners are in no hurry to offer vessels for Ukrainian ports. The only activity on the market is the WFP UN tender for 1-2 cargo up to 30k food wheat for August. The seaports of European ports are busy, and the weath- er conditions of the Northern Hemisphere are unfavorable. China is active. The Baltic Exchange's main shipping index rose last Fri- day as rates rose across the ship's component segments. However, the index posted its worst week since the end of June, falling 7.6%. In this deal a lot will depend on willing- ness from the shipowner’s side to provide vessels, and how much this risk will cost.