Allies urge Russia to re-enter Ukraine grain deal after food prices begin to rise

Mon 31 Oct 2022
Posted by: Phillip Adnett
Trade News

Port of Odessa - Ukraine Grain deal Russia urged to re-enter

The EU, US and the UN have all urged Russia to re-think its decision to pull out of the Black Sea grain deal as fears mount over the impact of its withdrawal on the global food supply chain.

Moscow announced it was halting the agreement for an “indefinite period” at the weekend, citing a “terrorist attack” on the port of Sevastapol in Crimea.

The UN and Turkey said on Sunday that they were in talks to try to persuade Russia to re-enter the agreement, reports Politico

Food as a weapon

US secretary of state Antony Blinken accused Moscow of “weaponising food” in pulling out of the deal.

The deal has allowed Ukraine, which is one of the world’s leading grain producers, to transport more than 9m tonnes of grain and oilseed commodities, reports the Guardian.

This helped bring down food prices by 15% from their March peak after the war made the route treacherous. Under the deal, Russia was also allowed to export food and fertiliser.

Grain price hike

Markets Insider reports that wheat futures jumped as much as 7.7% higher on Monday with the Chicago Board of Trade’s benchmark wheat contract at over $893 at one point.

Arif Husain, chief economist at the UN World Food Programme, said “dozens of countries” would be affected by disruption, reports the FT.

Grain ships are still leaving Ukrainian ports, according to Euronews which reports two cargo ships loaded with grain are setting sail today (31 October).

Till leaving

A total of twelve cargo ships are due to leave the Black Sea ports today and four others are heading there.

However, Kyiv’s infrastructure ministry said on Sunday that 218 vessels were now “effectively blocked” in its ports.

Russian reticence

As previously covered in the IOE&IT Daily Update, Russia had threatened to pull out of the deal ahead of the deadline to renew it.

Russian President Vladimir Putin had expressed unhappiness with the grain deal claiming it was not benefiting the “poorest countries”.

Russia has repeatedly said that there were serious problems with the deal, with the Kremlin claiming that Russian exports were not benefitting.