July 23, 2026
Choking the Grain Trade
Russia and Ukraine are trying to deprive each other of export revenue.
By: Ekaterina Zolotova
The Russia-Ukraine war has taken a noticeably naval turn. Attacks have intensified in the Sea of Azov and the Black Sea. Ukrainian armed forces have struck seagoing vessels, forcing Russia to suspend shipping through the Don-Azov Canal and the Kerch Strait. In response, Moscow has destroyed Ukrainian infrastructure near Odesa and other Black Sea ports. The fighting has limited both countries’ ability to generate export revenue.
The trouble for the rest of the world is that these waterways are crucial arteries for grain delivery. In this way, the war in Ukraine is renewing concern over food security.
The Azov-Black Sea basin has been a hotly contested area throughout the conflict because of its geographic proximity and its economic significance. For Russia, the basin accounts for 30 percent of all port cargo turnover. This route is especially important for grain exports; the Novorossiysk Grain Terminal, the Taman Grain Terminal Complex, the Rostov Grain Terminal and the Tuapse Grain Terminal in Russia are all located in the Black Sea basin. And while anti-Russian sanctions have led to a decline in traditional exports like oil and natural gas, they have yet to affect grain sales.
In fact, grain exports have risen. According to the results of the first half of 2026, there was an increase in grain shipments from Russia to Turkey (86 percent), Egypt (45 percent), China (63 percent) and Iran (75 percent), and even higher jumps in exports to places like Kazakhstan, Sudan, Kenya, Uganda, Mozambique, South Africa and Brazil. It’s little surprise, then, that Ukraine has intensified attacks against energy infrastructure and tankers, as doing so hurts not only Russia's ability to sell petroleum products but also its ability to export in general.
Russia is a major wheat producer, so its suspension of shipping lanes in the Sea of Azov and the Black Sea is particularly concerning for farmers, who worry about reduced export opportunities amid rising costs and, increasingly, drone attacks. In the Krasnosulinsky district, for example, a fallen drone caused winter wheat to catch fire. Though it didn’t meaningfully affect Russia’s overall supply, it did impose losses on farmers who are unlikely to be repaid by a government with increasingly tight budgetary constraints. Farmers are already losing about 1,000 rubles ($13) per ton of grain due to rising diesel prices, and restrictions in the Sea of Azov effectively double this amount. Continued financial pressure could force farmers to reduce grain plantings, which in time would undermine Russia's position as a major grain exporter.
Retaliatory strikes to destroy Ukrainian port infrastructure are creating a similar problem for Kyiv – one that could pose a more serious challenge to the Ukrainian budget. Agricultural exports are a key source of foreign exchange earnings for Ukraine, and more than 90 percent of grain, vegetable oil and other agricultural product shipments pass through just three ports in the Odesa region. Russian missile and drone strikes have taken about a third of Ukrainian grain export capacity offline at Black Sea ports. Russian drone attacks on Odesa have also reduced storage facilities, limiting Ukraine's export capacity even if the coastal sea route or safe corridor is restored.
The turmoil in the Black Sea, coupled with the ongoing near-daily exchange of drones and missiles, means the global market will miss out on Russian-Ukrainian supplies. This is yet another blow to food security, especially given the ongoing uncertainty in the Strait of Hormuz, which will further push up food prices. The forecast for Russian wheat exports in July has already been reduced by 20 percent thanks to these attacks, the delayed harvest and the fuel crisis in Russia. If the trouble in these waters continues, Russia may be unable to deliver as much as 10 million tons of wheat to the global market.
It will be difficult for Russia to offset the losses. The complexity of grain exports lies in the need for infrastructure and transport dedicated specifically to grain, and although Russia has grain terminals in the Far East and the Caspian Sea, they aren’t big enough to handle redirected shipments from the Black Sea basin. And that’s to say nothing of logistical constraints involved in transporting grain from the west to terminals in the Far East. Moving grain through Central Asia will be similarly difficult; Kazakhstan has imposed a strict six-month ban on Russian wheat imports to protect its domestic market from surplus grain and prevent elevators from being overstocked with cheap Russian raw materials ahead of its own harvest.
Ukraine, meanwhile, could reroute some of its grain exports by river through ports on the Danube for further shipment from the port of Constanta on Romania's Black Sea coast. However, European farmers would likely oppose this move.
Europe, the United States and Canada – the world’s largest suppliers of grain, particularly wheat – are unlikely to recoup losses either. The unusually hot weather in Western Europe has raised concern about the condition of wheat crops. Producers in Canada are hesitant to sell the remainder of the old harvest due to concerns about the quality of the new one; prolonged rains in Alberta and Saskatchewan increased the risk of significant damage to crops, while unfavorable weather hampered timely application of crop protection products. The U.S. Department of Agriculture updated its forecast for U.S. wheat production in the 2026-27 season to 42.45 million metric tons, the lowest in 54 years. The revision was driven by severe drought in the U.S. wheat belt, which will reduce the hard red winter wheat harvest by 25 percent compared to last year.
The bottom line is that Russia and Ukraine are actively trying to deprive each other of budget revenues and the opportunity to continue international trade. The war in Iran has already led to higher prices for fuel, fertilizer and maritime transport, resulting in a sharp increase in grain production costs. Pessimism about harvests has pushed futures markets higher. A prolonged suspension of navigation will significantly complicate matters further, especially if the suspension occurs during the peak export period from August to December. Much rests on the revival of the now-dead grain deal.