MOSCOW- Grain trade from Russia's ports on the Azov Sea will slow sharply as winter freezes the bulk of port operations, leaving the Black Sea as its main shipment route and easing the potential impact of any export curbs that could hit the region amid Russia-Ukraine tensions.
Should tensions between Moscow and Kiev mount in future, leading to new incidents in the Kerch Strait, some shipowners could refuse to do business in the Azov Sea, traders said.
There is also a risk of counter-measures. Annegret Kramp-Karrenbauer, an ally of German Chancellor Angela Merkel, said last week the European Union and the United States should consider banning from their ports Russian ships originating from the Azov Sea.
Russian wheat export prices were unmoved last week as traders interpreted a standoff in the strait, which connects the Black and Azov Seas, as a short-lived incident. Russia seized three Ukrainian navy ships and their crews in the strait on Nov. 25. 5
"It happened at the right time because the seasonality is good for us," a grain trader said.
He and others said the incident happened in the low season for the shallow-water ports of the Azov Sea. A disruption of supplies during high season would have put enormous pressure on Russia's deep-water ports in the Black Sea.
Russia, the world's largest wheat exporter, has built up supplies from the Azov Sea to more than 40 percent of its total grain exports in recent years, while Ukraine supplies only 2-3 percent of its grains from the Azov Sea.
"There will be ice conditions soon, so the amount (of supply from the Azov Sea) will drop anyway," said Dmitry Rylko, the head of the IKAR agriculture consultancy.
If the EU goes ahead with measures, the effect on Russian grain will be very limited as most of the country's grain goes to Africa, the Middle East and Asia, not to the EU, Rylko said.
However, such a move could hit supplies of several animal feed products, mainly by-products from sunflower oil and sugar beet production, which Russia sells to the EU, Rylko said, adding that this risk is theoretical for now.
(Reporting by Olga Popova and Polina Devitt; writing by Polina Devitt; editing by David Evans) ((Polina.Devitt@thomsonreuters.com; +7 495 775 12 42; Reuters Messaging: polina.devitt.reuters.com@reuters.net))
