Prices volatile as Russia withdraws from Black Sea initiative

Grain Central, July 18, 2023

A hatch closes on the last vessel for now to be inspected prior to Russia withdrawing this week from the Black Sea Grain Initiative. It is carrying corn loaded at the Ukrainian port of Odessa, and was inspected at anchor in North Istanbul. Photo: UN

GLOBAL grain prices will continue to be volatile until the market is able to decipher the end impact of Russia withdrawing from the Black Sea Grain Initiative, according to Rabobank senior grains analyst Dennis Voznesenski.

The deal, which has allowed wartime Ukraine grain exports across the Black Sea, expired overnight Australia time after Russia confirmed it would not agree to its renewal.

Mr Voznesenski said global grains prices had been on a rollercoaster since the agreement expired as the market “attempts to decodify the impact on international trade flows”.

“The main question will be whether Ukraine continues to export through the Black Sea without the safety of the grain corridor.

“Prices will continue to be volatile until the market is able to decipher the end impact.

Since war in Ukraine broke out in February last year, Ukraine has been building export avenues away from its Black Sea grain ports.

“They are not yet sufficient enough to entirely compensate for the loss of the Black Sea Grain Initiative.

“More than 40 percent of Ukraine’s grains and oilseeds exports moved through the grain corridor in recent months, with the remainder moving over road and rail into eastern Europe and through the Danube River system.

“The Danube river system export capacity has been increasing substantially since the war started, but more expansion will take time.”

Mr Voznesenski said the impact of the expiry of the Black Sea Grain Initiative on Russian grain exports will also need to be seen.

“Any exemptions that Russia was given by the west in return to signing up to the grain corridor will likely become void, possibly slowing its export abilities.”

In a statement issued on Monday, United Nations Secretary-General António Guterres said the BSGI has ensured the safe passage of more than 32 million tonnes of food commodities from Ukrainian ports.

“I deeply regret the decision by the Russian Federation to terminate the implementation of the Black Sea Initiative, including the withdrawal of Russian security guarantees for navigation in the northwestern part of the Black Sea,” Mr Guterres said.

Source: Rabobank, United Nations


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