Grain corridor is extended but terms are still uncertain
At the time of writing on 20th March, Mintec has learned that the grain corridor deal that was due to expire on 18th March has been extended with Turkey, Ukraine, Russia and the UN attesting that a deal has been concluded. However, currently there is no clarity over the length of the deal. Russia has claimed that it has “agreed to extend the Black Sea Grain Initiative by just 60 days (instead of 120), until May 18, 2022.” The infrastructure minister of Ukraine, Alexandr Kubrakov, has suggested that the deal is instead extended for 120 days, similar to the prior extension signed in November 2022.
Market players are trading very cautiously today as the uncertainty around what deal has come into force could impact trade flows and demand for the vegetable oil complex at large significantly.
A trader commented to Mintec, “it’s just a guessing game at this point. No one has a clue if it is 60 days or 120 days. Russia is making statements, but so is Turkey, the UN and Ukraine. I have no idea who to believe. Until we get some clarity from somewhere, it's going to be very unlikely we see any significant deals concluded.“
As outlined here, a 60-day extension would mean that booking forward shipments would be near impossible, as booking vessels to enter Ukraine and acquire materials is currently more than a 60-day turnaround. Also, crushers may struggle to get material to crush within these time frames, with the likely result being that more seed would need to be exported to adhere to these strict timelines. While if the extension is 120 days, “normal service would resume,” a trader commented to Mintec.
Mintec will continue to update this story as more details come to light.
