Russia’s withdrawal from the Black Sea deal reignites grain prices

Wheat prices have risen again after Russia suspended an agreement that has ensured safe passage for Ukrainian exports in recent months, with Moscow warning that shipments “would become more dangerous without their participation.”

The Russian State Duma said that “there is no return to the wheat agreement with Ukraine under the same conditions as before”.

While the grain ships are still sailing from Ukraine’s ports across the Black Sea, it’s unclear how long it will last after Russia pulled out of the deal last weekend. According to Bloomberg, shipments of Ukrainian crops to ports have been halted in amidst uncertainty.

Ukraine is one of the world’s largest suppliers of wheat, corn and vegetable oils, and the July agreement to open three ports on the Black Sea was instrumental in helping to alleviate the global food crisis.

Russia’s announcement that it would suspend “indefinitely” its participation in the safe passage agreement, brokered by Turkey and the United Nations, sparked broad condemnation from Ukraine and its allies, with the president United States Joe Biden who warned that famine would increase.

In the wake of these events, the price of wheat on the Chicago Board of Trade jumped 6.4% to $ 8.8225 per bushel, after climbing 7.7%. Corn prices increased by 1.6% and soybean oil by 2%.

The latest uncertainty comes when the International Grains Council estimates that world grain stocks are at their lowest in eight years. Supply is under increasing pressure, most recently with drought in Argentina and heavy rains in Australia that have hindered the grain crops that are about to be harvested there.

The United Nations and Turkey are struggling to salvage the deal, which was supposed to be extended before November 19, and analysts say shipping and insurance costs are likely to rise even as shipping exports continue.