Russia halts renewal of Ukraine grain deal hours before it expires
From staff and wire reports
MOSCOW – Russia is pulling out of the international deal that allows grain exports from war-torn Ukraine, and said it will only renew the agreement once conditions relating to Russian produce are met, a Kremlin spokesman said on Monday.
The deal is due to expire late Monday night after several extensions. The Kremlin had previously indicated that it wasn’t satisfied with the way it was being implemented.
Ukraine and Russia are two of the world’s biggest grain exporters to countries in Africa, the Middle East and parts of Asia. Russia’s ongoing war in Ukraine, which began in February 2022, pushed up grain prices around the world.
Randy Fortenbery, an agriculture economist at Washington State University’s School of Economic Sciences, said the U.S. markets have not yet reacted to any possible disruption from the Russia situation.
He noted that he saw a report indicating that Ukraine President Volodymyr Zelenskyy believes his country will be able to continue to ship wheat out of the Black Sea.
“If it turns out that doesn’t happen, and we have some supply issues … then there will be a price response,” Fortenbery said.
The Black Sea shipping deal was struck to help secure supply for countries that rely on grain from the war-torn region.
After starting the war, Russia blocked Ukraine’s Black Sea ports for months, preventing the export of sea-borne grain and prompting fears of soaring prices or famine in some areas.
The agreement allowed Ukraine to ship millions of tons of grain across the Black Sea.
On Sunday, possibly one of the last ships cleared for travel under the Black Sea deal set off from the port of Odessa in southern Ukraine.
According to the United Nations, it is loaded with more than 15,000 tons of rapeseed.
The Kremlin is demanding an easing of sanctions on Russian food and fertilizer exports.
Many other governments, as well as the U.N., are appealing to Russia to renew the agreement.
Kremlin spokesman Dmitry Peskov denied that Monday’s attack on the Kerch bridge to the annexed peninsula of Crimea had any impact on the future of the grain agreement.
“These are two unrelated events. You know that even before the terrorist attack, the position was voiced by (Russian) President (Vladimir) Putin,” he said.
The bridge was attacked by overwater drones early on Monday morning, the Russian authorities said. The bridge spans a 19-kilometre stretch over the Kerch Strait and is the only link that does not run through the war zone.
Meanwhile, Turkish President Recep Tayyip Erdoğan said he thinks Putin still intends to renew the grain deal.
“I believe Russian President Putin wants continuation of this humanitarian bridge, despite today’s statement,” Erdoğan told reporters in Istanbul, referring to the earlier Kremlin comments.
Erdoğan said he would hold talks with his Russian counterpart ahead of Putin’s anticipated visit to Turkey in August, in remarks made ahead of a two-day Gulf tour to Saudi Arabia, Qatar and the UAE.
An agreement to extend the grain deal “without interruptions” could still be possible before Putin’s visit in August, Erdoğan said, adding that negotiations were under way.
Fortenbery, of WSU, noted that farmers in Ukraine typically grow red wheat, the same kind grown in the Midwest. Most farmers in Washington, Idaho and Oregon grow primarily soft white wheat for markets in Asia.
That means Washington wheat farmers probably won’t see any immediate change in prices unless those events somehow disrupt the world wheat supply.
As for prices as farmers get ready to start harvesting Washington’s crop, Fortenbery said the landscape remains favorable.
The U.S. Department of Agriculture “forecast lowered the expectation to about $7.50 a bushel,” he said. “They are still pretty high, but not like what it was a year ago.”
In 2022, wheat prices were more than $8 a bushel.
While lower, the 2023 prices are still “higher than the 10-year average,” Fortenbery said.