ISTANBUL: A deal to facilitate agricultural and grain exports from Ukraine’s southern Black Sea ports was extended on Thursday for 120 days in an effort to alleviate global grain shortages.
By enabling shipments to continue from three ports in Ukraine, a significant producer of grains and oilseeds, the agreement, first struck in July, created a secured sea transit corridor and was intended to ease global food shortages.
UN Secretary-General Antonio Guterres said on Thursday that “I welcome the agreement by all parties to continue the Black Sea grain initiative to facilitate the safe navigation of export of grain, foodstuffs and fertilizers from Ukraine.”
Removing remaining obstacles to exporting food
Antonio further stated that the UN ready and “fully committed to removing the remaining obstacles to exporting food and fertilizers from the Russian Federation” although Russia sees this grain deal as critical.
According to media reports, a person involved with the negotiations in the renewal process has said that negotiations to extend exports yet not included Russian ammonia export through a pipeline to the Black Sea.
Rebeca Grynspan, U.N. Conference on Trade and Development Secretary-General, said on Twitter that “The renewal of the Black Sea grain initiative is good news for global food security and for the developing world,” Grynspan referred to this grain deal as a “beacon of hope” and “Solving the fertilizer crunch must come next,” Rebecca added.
International Grain Prices and Shortage
The COVID-19 pandemic and other climate shocks, like droughts in Argentina and the United States, have also been significant factors in this year’s global food shortage and price issue.
A decrease in imports from Ukraine after Russia’s invasion in February has also contributed to food shortage and crisis.
Before the extension of the grain pact, 11.1 million tons of grain products, in which 4.5 million tons corn and 3.2 million tons wheat, have been transported since July this year.
Wheat prices have declined
In Chicago Board of Trade, wheat prices have declined, with the benchmark contract down 2.75 per cent at $7.95 per bushel and corn prices down 1.3 per cent to $6.60-1/2.
One French trader stated that the extension in the grain export deal amid the Russia-Ukraine war has provided stability in the business and trade environment and said, “This is bearish for the market.” because it clears up any remaining uncertainty and provides clarity for the upcoming four months.
The United Nations and Ukraine requested a one-year extension, but the 120-day extension was less. In four months, uncertainty will return as people wonder whether Russia will agree to another extension.
