Black Sea Wheat, Prices on the Rise

After the non-renewal of the agreement between Moscow and Kiev on the export of Ukrainian wheat, prices on international markets began to rise. The West criticizes the Kremlin, which responds that the part of the deal concerning Russian exports was never implemented, and less than 4% of food exported from Ukraine went to developing countries.

Agricultural markets instantly reacted to the non-renewal of the multilateral agreement between Russia, Ukraine, Turkey, and the UN on the safe export of Ukrainian grain products through the Black Sea. On the Chicago Stock Exchange, futures prices for wheat for September delivery grew by 4.24% to $6.89 per bushel (about 30 kg – editor’s note).

“The decision made in Moscow increases instability in international markets and encourages profiteering. The Russian Federation continues to use food as a weapon and a pressure tool to ease sanctions,” told reporters Massimiliano Giansanti, President of Confagricoltura.

Italy is the fourth largest importer of Ukrainian cereal products in the world: 2.1 million tons of products have been imported over the past 12 months, of which 65.7% was corn (1.3 million tons), 21.1% was soft wheat (435 thousand tons), and the remaining 5% was sunflower oil (100,000 tons).

The Black Sea grain deal that was reached on July 22, 2022 allowed Ukraine to export about 33 million tons of grain and oilseeds by sea. 25% of all grain exports were absorbed by China that put strong pressure on Moscow to give the green light to the fourth extension of the agreement.

Moscow’s decision was heavily criticized by the UN and the West. “Millions of people will pay for Russia’s withdrawal from the wheat deal,” UN Secretary General António Guterres said. “Russia is solely responsible for the shipping blockade in this naval space and imposes an illegal blockade of Ukrainian ports,” said in a statement the French Foreign Ministry spokesman.

Moscow is trying to turn the charges against the senders, claiming that “as soon as the part of the agreement concerning Russian agri-food exports is implemented, the agreement will be extended.” Moscow accuses the West of blocking the export of chemical fertilizers and insists on connecting Rosselkhozbank, the country’s largest agricultural bank, to the Swift telecommunications system. According to the Kremlin, less than 4% of Ukrainian products exported under the Black Sea Agreement went to the neediest countries in Asia, Africa, and Latin America. On July 17, the Russian Foreign Ministry issued a note, according to which “contrary to the declared humanitarian goals of the entire deal, Ukrainian food went to rich countries, including EU countries, while less than 3%, which is just over 900 thousand tons out of 32.8 million tons of food products exported by Ukraine, went to poorer countries, including Ethiopia, Yemen, Afghanistan, Sudan, and Somalia.