Grain corridor deal raises concerns in the sunflower oil market as renewal deadline looms
The Mintec Benchmark Prices [MBP] for Sunflower Oil FOB Northwest Europe (6 ports option) [Mintec Code: SFOR] was assessed at $954.50/mt down $5.00/mt on the week, as interest from a European perspective continued to be low and players took a risk-off approach following continued issues with the grain corridor causing concerns about obtaining purchased shipments. The concerns about shipments stem from the fact that Russia has not been approving new vessels unless the operators can make sure the shipment is concluded before 18th May, when the current grain corridor deal is to close. The lack of approvals is causing a significant backlog of ships waiting in the Bosphorus and limiting Ukrainian exports onto the open market. It is worth noting that talks which occurred between the UN, Turkey, Russia and Ukraine on 10th and 11th May have ended and no extension to the grain corridor deal has been concluded at the time of writing. Turkey did announce that the talks were “constructive” and would continue. Mintec learned that the extension that is being proposed is for two months, with Turkey and the UN both seemingly behind this move. However, market players commented to Mintec that “most were expecting something to happen on the 10th and the 11th. Now that it hasn’t, it has raised concerns that the deal might be closed entirely and many players in Ukraine are preparing for this to become the reality.” Adding further doubts to the continuation of the corridor deal are the significant demands being sought by Russia such as the reconnection to the SWIFT banking system which the UN is exceedingly reluctant to grant.
A trader commented to Mintec, “I am pessimistic. I don’t think there will be any agreement on the grain corridor deal. In my view, Turkey was a key driver in getting a grain corridor deal pushed through, yet now it doesn’t seem to be as interested and is focusing on internal politics rather than international concerns. Added to that, I think some conflict analysts are expecting an intensification of hostilities shortly, which will further complicate the negotiations.”
Mintec will update this story as more details unfold in the coming days.
