In a Sign of Hope, India Plans to Resume Buying Ukrainian Ag Cargoes

port of odesa
The Port of Odesa in better times (file image)

Published Jul 28, 2022 7:15 PM by The Maritime Executive

India has placed a vote of confidence in the newly-signed Black Sea shipping agreement by resuming imports of Ukrainian sunflower oil, which the Indian market has sorely missed. Since the beginning of the blockade of Ukrainian ports, Indian buyers have had to pay record-setting prices for Russian sunflower oil and substitute imports of palm oil to fill the gap. The resumption of Ukrainian trade would provide some relief for the world's largest importer of edible oils, according to Bloomberg.

India's Sunvin Group expects to receive about 50-60,000 tonnes of sunflower oil as soon as September, according to CEO Sandeep Bajoria. He told the Business Standard that the trade will still depend upon the availability of vessels to deliver the cargo - a potential sticking point given war risk in the region.

India usually imports about two million tonnes of sunflower oil per year, and nearly 75 percent of the total normally comes from Ukraine. That percentage dropped to zero after the Russian invasion and blockade began in February. A suspension of India's import tariffs will help spur a revival, according to the Business Standard.

On Thursday, UN aid chief Martin Griffiths told reporters that he was optimistic that the new corridor would be up and running as soon as procedures were established. "We are hopeful . . . for the first ship movements to take place within days – hopefully tomorrow – out of those ports," Griffiths told Reuters.

Shipping data also points towards a resumption of trade to and from Ukraine in the near future, according to leading supply chain visibility company FourKites.

"My hope is that this agreement gives big shipping companies the confidence to resume operations in the region," says Philippe Salles, FourKites’ VP Strategic Solutions (Ocean). "Despite the latest missile attack at the port of Odesa, indicating ongoing volatility in the region, our data indicates that shippers are well prepared for any contingency."

Political challenges

The success of the shipping corridor is still by no means certain, like the course of the broader war. The negotiations hinged on Russian cooperation, and the practical success may depend upon Russia's willingness to adhere to the terms. Russia attacked the key grain port of Odesa less than a day after the accord was signed, and it has continued to attack Ukraine's coastline with missile strikes over the course of the week. Its record with neutral shipping includes seven foreign vessel attacks and multiple vessel seizures since the start of the invasion in February.

Dr. Michael Kofman, Research Program Director in the Russia Studies Program at CNA, predicts that the Black Sea shipping deal will last as long as Russia finds it advantageous.

"They do want the deal. On the other hand, they're probably calculating that the deal comes so late in the year that Ukraine actually won't be able to get most of its grain to market," Dr. Kofman suggested in a recent podcast. "They'll still conduct strikes that drive away investors or anybody else from Ukraine and continue economic pressure on Ukraine. They will stick to the deal . . . to an extent, as long as they're able to get [Russian] grain and fertilizer out. And when it's no longer convenient for them, then the deal will collapse."

The only Ukrainian-driven risk factor for the agreement - the mining of waterways - is not a major obstacle, according to the corridor's Turkish mediators. Turkish Defense Minister Hulusi Akar told Xinhua on Thursday that "there is no need at this stage" for demining in order to implement the grain corridor.