The Black Sea grain initiative that facilitates the safe navigation of the export of grain and oilseeds from Ukraine is set to expire in mid-March 2023 and is supposed to be extended. However, Russia announced on Monday, 13th February, that it is disappointed with the deal and requested that sanctions (including payments, logistics and insurance) affecting its own exports to be removed.
A trader commented to Mintec, “Russia has said it before that the deal will be stopped, while the deal has been running. Last time when Russia wanted to cancel the action of the grain corridor, Turkish President Erdogan was very interested and acted as mediator alongside the United Nations, now he might not be up for it [given the earthquake in Turkey]. The deal does not benefit Russia, but it does benefit Ukraine. Ukraine gets more cash flow and access to the global markets again. Now Russia is prioritising exporting its grain. It is all political, but again there is no reason to think that this deal will last unless some serious concessions around Russian sanctions are allowed this time.” Another trader added, “the grain corridor should be extended, but I believe there will be some political bidding on this subject. Perhaps we could see that the corridor may be stopped for some time. But for sure, the market is now worried around the availability of Black Sea supply.”
Ukraine has exported approximately 21.19 million metric tonnes (mt) of grains and oilseeds from the start of the grain corridor deal (June 2022) to the end of January 2023, out of which 15.4 million mt is corn and 9.7 million mt is wheat. However, in January 2023, grain shipments decreased by 1.3 million mt due to the long vessel inspection time. A Mintec source added, “the average waiting time for outbound vessels is still very long, close to five or six weeks. There are vessels waiting since December.”
Thus, uncertainty around the grain corridor continuation has pushed Euronext wheat and corn futures prices up in recent sessions, and has also caused concerns around crop planting and harvesting for Ukrainian farmers.