Kateryna Mudriian
Chief Analyst at ASAP Agri

Inna Stepanenko
Chief Analyst at ASAP Agri

Victoria Blazhko
Head of Analytics at ASAP Agri

In 2022, the grain market watched grain vessels stranded in the Black Sea Ukrainian ports. In early 2026, attention shifted to oil tankers, fertilizer flows, and insurance costs around the Strait of Hormuz. The source of disruption has changed. The lessons, however, are largely the same.  Global grain trade remains highly vulnerable — not only to disruptions in supply, but increasingly to disruptions in cost, logistics, and execution. The ASAP Agri analyst team brings together market intelligence and on-the-ground insights to assess how these shocks are reshaping trade flows, pricing, and execution risk — and what they mean for Black Sea grain traders.

HORMUZ DISRUPTION: A COST SHOCK, NOT A SUPPLY SHOCK

Freight: the first transmission channel

The disruption in the Strait of Hormuz triggered an immediate and sharp increase in bunker prices — and with it, freight rates. According to Ship & Bunker data, the average bunker price across 20 major global ports rose from 543.5 USD/MT on 27 February to 735 USD/MT on 6 March, before surging further to 1053 USD/MT by 20 March. Although prices partially corrected later in the month, they remained elevated at 971.5 USD/MT as of 31 March, which was still well above pre-conflict levels.

The increase in bunker prices was rapidly passed through to freight across all vessel segments. Shipowners revised freight rates upward, negotiations slowed, and charterers faced growing difficulty securing tonnage. Freight was no longer behaving as a stable input — instead, it became a source of volatility that directly influenced trading decisions.

Market data confirms the scale of the move. ”Freight rates for a 30 KMT corn shipment from Ukrainian deep-water ports to Marmara rose from around 18–19 USD/MT on 27 February to 23 USD/MT by 20 March. Over the same period, freight to the Eastern Mediterranean increased from 21–22 USD/MT to 28–29 USD/MT, while rates to the East Coast of Italy moved from 25 USD/MT to 30 USD/MT,” Taras Panasiuk, Head of Freight Department and Co-Owner at Atria Brokers said. “In the coaster segment, the increase was even more pronounced. Freight from Ukrainian shallow ports to Marmara rose from 26–27 USD/MT to 30–31 USD/MT. Longer routes saw sharper gains, with rates to the Eastern Mediterranean rising from 32–33 USD/MT to 40–42 USD/MT, and to the East Coast of Italy from 37–39 USD/MT to around 45 USD/MT.”

Similar dynamics were observed in the Russian market, where coaster rates from Azov ports to Marmara increased from around 48 USD/MT to approximately 53 USD/MT.

In some cases, freight levels were pushed beyond what was needed to offset higher bunker costs, effectively adding a speculative premium to the market. This was particularly visible on routes from Ukrainian ports to the Eastern Mediterranean, where it led to cancellations of previously fixed voyages or forced charterers with urgent cargoes to secure alternative vessels at elevated levels.

Dr. Mykhailo Lytvyn, CEO of a Swiss-based trading company MVE PROSPERA AG, highlighted how immediate and disruptive these changes were: “In our case, a shipowner with whom we had already fixed a vessel for Egypt came back and demanded an additional 5 USD/MT in freight to proceed with the voyage. We refused and decided to take legal action. At the same time, however, we still had to cover the shipment by fixing another vessel at a higher rate — resulting in direct financial losses.”

Amid uncertainty over how far bunker prices could rise, the market shifted toward spot activity, with operators increasingly reluctant to fix forward positions.

By mid-March, however, the market began to adjust. Fixing activity for Ukrainian grain improved slightly, as charterers with previously sold cargoes were forced to meet contractual obligations. This recovery was most visible in the Handysize segment, while the coaster market remained under pressure, with a persistent gap between charterers’ bids and owners’ offers.

As bunker prices stabilized toward the end of March, freight rates also stopped rising and, in some cases, edged lower. The speculative premium began to ease, allowing charterers and shipowners to find common ground more frequently. Nevertheless, freight levels remained elevated compared with pre-war conditions.

According to Panasiuk, handysize rates showed mixed dynamics in late March: freight to European destinations edged slightly higher, while rates to Turkey and the Eastern Mediterranean softened. “In the coaster segment, most deals were concluded close to previous levels. Tonnage remained limited, but the number of firm cargoes was also relatively small, capping further upward pressure.” 

Freight from Russian Azov ports to Marmara also softened slightly, easing to around 52 USD/MT by the end of March

This apparent stabilization, however, may prove temporary. With the U.S.–Iran conflict far from resolved, any renewed escalation could quickly reignite upward pressure on bunker fuel prices — and, in turn, push freight rates higher once again.

At the same time, the effects of the earlier spike are already feeding into trade flows — beginning to reshape execution, pricing, and buyer behavior.

FREIGHT-DRIVEN ADJUSTMENT: FROM FLOWS TO EXECUTION AND PRICE FORMATION

Higher freight costs did not simply increase the price of moving grain — they began to reshape where grain could move and under what conditions it could be delivered. With the Persian Gulf effectively unavailable, the market was forced into rapid rebalancing, as cargoes were redirected toward a limited set of alternative destinations. This adjustment was not gradual. It happened almost immediately, as cargoes already in transit had to be rerouted and new shipments redirected.

“Within the first two weeks after the outbreak of the U.S.-Iran war, several corn vessels chartered by Turkish or UAE traders were already en route to the Gulf. All of a sudden, we faced a large number of afloat offers from other market participants and brokers, as buyers began requesting washouts or contract postponements, forcing those Panamax cargoes to be redirected toward alternative destinations — mainly Turkey, Egypt, Italy, and Spain. Until these displaced volumes were absorbed, they continued to put pressure on prices, deteriorating demand for our own positions offered to compliant MENA destinations,” said Dr. Lytvyn.

The effect was straightforward but significant: more grain competing across fewer markets — mainly Turkey, Egypt, and Italy — intensifying competition and putting short-term pressure on prices. But while the reorientation of flows was clearly visible, a deeper shift was taking place beneath the surface. 

The core constraint in the market was no longer price; it was execution. A representative of an international company with a diversified global presence, speaking to ASAP Agri on condition of anonymity, said: “Freight is higher, war risk insurance is limited or very expensive, and many shipowners avoid Gulf ports. Shipping lines now act on a case-by-case basis. Some block discharge in Saudi Arabia; others reroute cargoes at a premium. Buyers are forced to move cargo inland to alternative destinations, which adds unexpected costs and disrupts processing schedules. In the end, it is the final consumer who feels it most.”

The same source added that this shift is already changing buyer behavior. “Nobody wants to be stuck with a cargo that cannot arrive on time. Deals are still done — but with a much stronger focus on execution and route safety. At the same time, buyers are not stepping away from the market. They still have commitments to end customers and intend to honor them under any circumstances.”

Looking ahead, the source warned that if the situation persists, the implications will be structural: “If the situation does not improve, buyers will have to operate in this environment for longer. This means higher landed costs, more complex logistics, and less predictability. Alternative ports and multimodal deliveries will likely remain in use, increasing both costs and lead times. At the same time, we believe that going through this period will ultimately make supply chains more resilient, with new routes and solutions emerging, and part of these additional costs gradually normalizing.”

The impact of these shifts is already visible in pricing dynamics. Over the month following the escalation on 28 February, Black Sea milling wheat prices rose to their highest levels since August 2025. Ukrainian and Russian FOB prices increased by around 6 USD/MT.

As of 27 March, Ukrainian 11.5% protein wheat was indicated at approximately 236 USD/MT FOB POC, while Russian 12.5% protein wheat reached 242–245 USD/MT FOB Novorossiysk.

However, the impact was more pronounced on a CIF basis. Offers for Ukrainian wheat into Egypt rose to around 264 USD/MT CIF — an increase of roughly 11 USD/MT since the start of the escalation.

Faced with heightened freight volatility, many traders shifted from CIF to FOB during the first weeks of the disruption. Elevated freight costs continue to weigh on trading activity and complicate forward planning.

Taken together, these shifts are not only affecting prices and trade flows — they are reshaping the conditions under which trade can be executed. In this environment, reliability of delivery — not just price — becomes the key differentiator.

WHY THIS MATTERS FOR THE BLACK SEA

Unlike in 2022, this time Black Sea exports have not been physically disrupted. Grain continues to move from Ukraine, Russia, Romania, and Bulgaria, with both Ukrainian deep-water and Danube routes functioning. But the basis of competition is shifting. The key question is no longer whether cargo can move, but how predictably and at what total cost it can be delivered.

This is where geography becomes critical. The Black Sea grain exports are structurally oriented toward nearby destinations — Mediterranean markets such as Italy, Spain, and Greece, as well as MENA buyers including Egypt, Turkey, and Algeria. These are short-haul routes, typically lasting 5 to 10 days, compared to 20 to 30 days for transatlantic shipments.

In normal conditions, this proximity is a commercial advantage. In a volatile freight environment, it becomes a strategic one.

Long-haul shipments are inherently more exposed to bunker price swings, insurance adjustments, and delays over the course of the voyage. Each additional day at sea increases uncertainty around the final landed cost. 

Freight is no longer a stable component of pricing — it has become part of price discovery. Distance is no longer neutral; it directly shapes both cost and execution risk. This explains why long-haul cargoes are becoming less predictable, while shorter Black Sea shipments offer greater visibility. As a result, in these market conditions, Black Sea grain often holds a clear execution advantage — even if it is not the cheapest option.

FERTILIZER CHANNEL – REAL STRATEGIC RISK

While freight and insurance define the immediate shock, fertilizers represent the deeper and more structural risk. Roughly one-third of global fertilizer trade passes through the Strait of Hormuz, while Gulf producers remain critical suppliers of urea and ammonia. A recent analysis by North Dakota State University shows that Persian Gulf countries account for about 43% of seaborne urea exports, roughly 44% of seaborne sulfur trade, and more than a quarter of global ammonia exports — a reminder that Hormuz is not only an energy chokepoint, but a fertilizer chokepoint as well.

Importantly, the fertilizer market did not enter this disruption in balance. Even before the escalation, global supply was already constrained by reduced European production — operating at around 75% of normal levels amid elevated energy costs — as well as ongoing Chinese export restrictions on both urea and phosphates, which continue to limit available volumes on the global market.

Since the escalation, fertilizer markets have tightened at exactly the wrong moment — the Northern Hemisphere planting season. Reuters, citing Bank of America, reported that prices had already risen by 30–40% by 20 March, with further reporting indicating that urea prices increased by roughly 40–50% from pre-conflict levels.

At the country level, Ukraine provides a clear illustration of how quickly the global shock is transmitted into farm economics. The agriculture ministry reported a 30–35% increase in fertilizer prices, while domestic urea prices rose by around 65% since the start of the year and 43% since late February. Field-level estimates confirm a similarly sharp — though not identical — dynamic.

“The price situation has deteriorated sharply. Urea prices have risen from around 26000 UAH/MT (FCA ports) in December to approximately 43000 UAH/MT currently — an increase of about 45%. A similar trend is observed for ammonium nitrate,” Dmytro Hordiychuk, Head of the Ukrainian information agency “Infoindustry”, told ASAP Agri.

In dollar terms, this corresponds roughly to an increase from about 615–620 USD/MT (based on an average official exchange rate of 42.2 UAH/USD in December) to around 980–985 USD/MT (at 43.8 UAH/USD currently), highlighting both the scale of the price move and the additional impact of currency dynamics. A similar trend is observed for ammonium nitrate. 

However, the impact is not uniform across the sector. As Hordiychuk points out, “large agricultural holdings that secured fertilizers in advance are operating relatively smoothly, while smaller farmers are facing much tighter conditions, with an estimated one-third having failed to purchase nitrogen fertilizers ahead of the price surge.”

“Liquidity constraints are further amplifying the problem. There was a period when farmers lacked liquidity due to delayed harvesting and sales, and by the time funds became available, they were no longer sufficient to cover current needs,” he added.

Pressure is particularly acute in the UAN segment, where significant volumes were pre-contracted for spring delivery, while traders had been counting on additional urea supply.

“The UAN market is under particular strain. Large volumes were contracted for spring deliveries, while traders were relying on additional urea supply that ultimately did not materialize. Due to port infrastructure attacks, at least 50 KMT of product did not reach the market, while unmet demand — primarily from smaller farmers — is estimated at around 70 KMT,” Hordiychuk said.

Returning to the global fertilizer market, the disruption is not only logistical but also production-driven. Damage to gas infrastructure in key Gulf producers and the closure of export routes are removing physical volumes from the market, not merely delaying shipments. As a result, the shock is cumulative: more tons are lost, more shipment days are missed, and supply tightness continues to build rather than stabilize.

This is where the second-round effect begins. Higher fertilizer prices reshape production economics for the next season. Across both Europe and the United States, the same pattern is emerging: as nitrogen costs rise, farmers begin to reconsider input-intensive crops such as corn and wheat, while soybeans and sunflower become relatively more attractive due to lower fertilizer requirements. Early signals from France point to a shift from corn toward sunflower, while in the United States, similar cost pressure is already pushing acreage from corn toward soybeans.

This channel introduces a different, but equally important, layer of risk alongside freight. While freight inflation distorts offers and trade flows in the short term, fertilizer inflation works more gradually, affecting yield potential, crop mix, and, ultimately, exportable surplus.

This shifts the focus from immediate execution to future supply: the fertilizer shock is less about current shipments and more about the balance sheet of the next season — and potentially the one that follows.

Crucially, the market is already signaling that this is not a short-term spike but a broader repricing. Market participants increasingly see the current disruption as having lifted the global price floor for nitrogen fertilizers for an extended period — likely through the remainder of 2026 and into 2027 — reflecting not only lost volumes, but also the time required to restore production capacity and normalize trade flows.

At the same time, additional risks are emerging on the demand side. India, one of the largest fertilizer consumers globally, has already seen domestic nitrogen production decline, while imports remain under pressure. Efforts to secure alternative supply from the global market and rebuild stocks are underway, and any aggressive return to the market could trigger a further upward leg in global prices, amplifying the current supply shock.

Beyond nitrogen, the phosphate market may prove even more structurally vulnerable. Supply is highly concentrated, with China, Morocco, Saudi Arabia, Russia, and the United States accounting for the majority of global production and exports. China continues to restrict shipments, Saudi Arabia faces logistical constraints linked to Hormuz, and producers in other regions are operating under higher cost pressure.

Crucially, phosphate production depends heavily on inputs such as sulfur, a significant share of which originates from the Persian Gulf. This further tightens the system. Even if logistics improve, elevated production costs are likely to prevent a meaningful correction in prices, suggesting that the lowest levels may already be behind the market.

The Black Sea implication is therefore twofold. First, farmers across the region face a margin squeeze from higher input costs, especially where corn competes with lower-input alternatives. In Ukraine, this logic is already visible in the discussion around corn. Ukraine’s deputy economy minister has indicated that while spring sowing in 2026 is unlikely to be disrupted, the current cost environment could lead to a reduction in fertilizer-intensive corn area as early as 2027. 

Second, Russia may gain some relative pricing support as a major fertilizer exporter outside the Hormuz route. Still, that advantage is not unlimited: Russian producers are constrained by domestic supply obligations, export caps, limited spare capacity, and recent plant disruptions, meaning they cannot fully replace the missing Middle Eastern volumes. In other words, Russia may benefit from firmer prices, but it cannot fully neutralize the supply shock.

The key lesson for Black Sea grain traders is clear: the Hormuz shock should not be read only through freight. The deeper risk runs through the fertilizer channel. If high nitrogen and energy costs persist, the market may face not only more expensive logistics but also a shift in crop mix, reduced fertilizer application, weaker yields, and a more fragile supply outlook for 2026/27 — and potentially for the season that follows — particularly for corn, which remains structurally dependent on nitrogen.

For prices, this creates an asymmetric setup: the market may not react immediately, but the foundation for firmer price support is already being laid. Should weather risks or demand surprises emerge, this support could strengthen further.

NEW MARKET REALITY

The Hormuz disruption highlights a broader shift in how grain markets function. For Black Sea traders, several lessons stand out.

1. Price is no longer enough — execution is the edge.

In a more volatile freight environment, the cheapest origin is not always the most competitive. The ability to deliver reliably, on time, and with manageable risk is becoming as important as the price itself.

2. Logistics shift from a cost component to a competitive driver.

Freight, insurance, and route uncertainty are no longer just embedded costs — they increasingly determine which origin can execute. Distance, flexibility, and access to alternative routes are becoming key factors shaping competitiveness in volatile markets.

3. Today’s costs are tomorrow’s supply.

The fertilizer shock is not just an input story — it is a forward-looking supply signal. Higher input costs today increase the probability of tighter supply, lower yields, and shifting crop mix in the seasons ahead.

The key takeaway is simple: grain markets are no longer shaped only by supply and demand, but by the cost and risk of connecting them.

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