November 28, 2018 / 9:50 AM / 21 days ago

UPDATE 2-Ukraine says martial law not affecting Azov Sea grain exports but outlook unclear

(Adds trader quotes, details)

By Pavel Polityuk

KIEV, Nov 28 (Reuters) - The imposition of martial law is not affecting Ukrainian grain shipments from ports on the Azov Sea so far and if necessary they can be diverted to the Black Sea, Ukraine’s acting agriculture minister told Reuters on Wednesday.

More broadly, the prospects for grain exports from the Azov Sea are unclear at this point, Maksym Martyniuk said in messaged comments.

Ukraine began martial law in some areas of the country on Wednesday, imposed after Russia captured three Ukrainian vessels and their crews over the weekend in what Kiev fears could be a precursor to a full-scale Russian invasion.

Among the biggest grain exporters in the world, Ukraine accuses Russia of trying to impose a de facto blockade on its ports on the Azov Sea, including Mariupol and Berdyansk, which export grain and steel and import coal.

When asked if the start of martial law had had an impact on grain exports, Martyniuk said: “Not yet.”

He said exports would be diverted to the Black Sea if they could not move freely on the Azov Sea. “The outlook is unclear,” he added.

Several traders told Reuters that buyers were refusing supplies from the Azov Sea ports. One predicted there would be few or no trades out of Berdyansk and Mariupol in the near future because buyers do not want to take shipments from those locations.

“In general there is not much panic in the market, as Azov port exports only affect about 4 to 5 percent of total grain exports out of Ukraine,” the trader said.

Mariupol port said it was operating normally with three ships loaded, one of them delivering steel products to Spain and two others delivering steel and slabs to the United Kingdom.

“Vessels are still moving to Mariupol and Berdyansk. There is no cancellation of operations and traders only add a few days for the expected delay,” a Ukraine-based trader said.

Sunday’s clash has raised the possibility of new punitive sanctions being imposed on Russia by the European Union. Russia says such sanctions would solve nothing and blamed Ukraine for the incident.

Ukraine’s 2018 grain harvest had reached 68.2 million tonnes by Nov. 27, a record high. Exports are expected to reach an all-time high of 47 million tonnes in the 2018/19 July-June season. (Reporting by Pavel Polityuk in Kiev and Veronica Brown in London Writing by Matthias Williams Editing by Matthew Mpoke Bigg and David Evans)

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