Russia strikes Ukraine's Danube port, sending global grain prices higher

Reuters:

Russia strikes Ukraine's Danube port, sending global grain prices higher

Firefighters work at a damaged property, following a Russian drone attack, amid Russia's attack on Ukraine, at Izmail, Odesa region, Ukraine, August 2, 2023, in this screen grab obtained from a handout video. Ukraine's Operational Command 'South' /Handout via REUTERS


Summary

• Port hit on Danube opposite NATO-member Romania
• Kyiv says aim is to intimidate shippers considering return
• Moscow pulled out of grain deal in mid-July

KYIV, Aug 2 (Reuters) - Russia attacked Ukraine's main inland port across the Danube River from Romania on Wednesday, sending global food prices higher as it ramps up its use of force to reimpose a blockade.

Ukraine's defence ministry said a grain silo was damaged in the Danube port of Izmail in the Odesa region: "Ukrainian grain has the potential to feed millions of people worldwide," the ministry wrote on messaging platform X.

The port, across the river from NATO-member Romania, has served as the main alternative route out of Ukraine for grain exports since Russia reintroduced its de facto blockade of Ukraine's Black Sea ports in mid-July.

Video released by the Ukrainian authorities showed firefighters on ladders battling a huge blaze several stories high in a building covered with broken windows. Several other large buildings were in ruins, and grain spilled out of at least two wrecked silos.

There were no reports of casualties, Odesa region governor Oleh Kiper wrote in a post on the Telegram messaging app.

"Unfortunately, there are damages," President Volodymyr Zelenskiy said on Telegram. "The most significant ones are in the south of the country. Russian terrorists have once again attacked ports, grain, global food security."

An industry source also confirmed Izmail was the main target of the attack, describing the level of damage there as "serious".

Chicago wheat prices jumped 4% following Wednesday's attack and were still up around 2.5% later in the morning, with traders worried anew about a hit to global supplies from driving Ukraine, one of the world's top exporters, off the market.

Russia has relentlessly attacked Ukrainian agricultural and port infrastructure for more than two weeks, since refusing to extend an agreement that had lifted its war-time blockade of Ukrainian ports last year.


PUTIN-ERDOGAN TALKS

The Kremlin said President Vladimir Putin had spoken by telephone to the grain export deal's sponsor, Turkish President Tayyip Erdogan.

Putin reiterated Russia's condition for rejoining the grain deal: that a parallel deal improving terms for its own food and fertiliser exports be implemented. Those exports are already exempt from sanctions, which the West says Moscow aims to undermine by applying pressure to the global food supply.

Moscow has described its recent attacks as retaliation for a Ukrainian strike on a bridge to Crimea, used to supply its troops in southern Ukraine.

U.S. ambassador Bridget Brink listed recent Russian targets.

"Homes. Ports. Grain silos. Historic buildings. Men. Women. Children," she said in a statement released by the embassy.

"Round-the-clock and intensifying Russian strikes on Kryvyi Rih, Kharkiv, Kyiv, Kherson make it clear once again Russia has no desire for peace, no thought for civilian safety, and no regard for people around the world who rely on food from Ukraine."

Kyiv says the goal of the strikes is to reimpose Russia's blockade by persuading shippers and their insurance companies that Ukrainian ports are unsafe to resume exports.

"It is the enemy's priority to convince the international community and shipowners in particular that the ports of Odesa, the ports of Ukraine are unreliable places to operate, to work, to load, to navigate. To convince them that navigation in the direction of Ukrainian-controlled ports is dangerous," said Natalia Humeniuk, military spokesperson in southern Ukraine.

Producers in Ukraine are already feeling the impact. Kees Huizinga, a farmer in Ukraine's central Cherkasy region told Reuters: "Because of the shelling a direct consequence to our farm is that we can not deliver 700 tons of contracted barley which we were supposed to deliver today".

Ukraine's Danube river ports such as Izmail accounted for around a quarter of grain exports before Russia pulled out of the Black Sea deal, and have since become the main remaining route out, with grain loaded onto barges and shipped to Romania's Black Sea port of Constanta for shipment onwards.

On Sunday, Ukrainian media reported several foreign cargo ships had arrived directly at Izmail from the Black Sea, for the first time since the expiry of the grain deal, an apparent bid to open a breach in Russia's newly restored blockade.

The United Nations has warned of a potential food crisis and hunger in the world's poorest countries as a result of Russia's decision to abandon the deal, brokered by the U.N. and Turkey.

Moscow says it will treat ships heading to Ukrainian seaports as potential military targets. Kyiv has said it hopes ships will return anyway.

As a result of the deal's collapse midway through July, Ukraine's grain exports for the month were down 40% from June, analysts said on Tuesday.

Russian drones targeted Ukraine's Danube ports once before in late July, destroying a grain warehouse. Ukrainian officials have said Moscow has hit 26 port facilities, five civilian vessels and 180,000 tonnes of grain in nine days of strikes since quitting the grain deal.

Ukraine's Air Force reported that Russia also launched a drone attack on Kyiv and the surrounding region overnight. Air defence shot down 23 drones, but debris from downed drones damaged several buildings in the capital and the region. No casualties were initially reported.