Grain and Ukraine 🌾

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Grain and Ukraine

Russia’s formal withdrawal from an UN-brokered grain export deal with Ukraine has sent shockwaves through the global food export market, potentially jeopardising tens of millions of tonnes of grain shipments. President Vladimir Putin’s spokesman, Dmitry Peskov, announced on Monday that Russia would no longer cooperate with the agreement, stating that it had “essentially stopped.” Russia has been voicing concerns about the parallel agreement for its own agricultural exports, which has been hindered by Western sanctions. The deal, in place for a year, has facilitated the export of approximately 33 million metric tonnes of food, with over half of it destined for developing countries. The agreement allowed Ukraine to export its grain via sea routes in the Black Sea. However, with Russia’s withdrawal, Ukraine may now be forced to reroute its exports through land borders and smaller ports along the Danube River. This alternative would increase costs and reduce farmers’ profits, potentially leading them to plant less in the next season and putting additional strain on future supplies.

Russia’s frustrations stem from the Western sanctions impeding its own agricultural exports. Despite some carve-outs and facilitation of payments for Russian agricultural exporters, Moscow insists that not enough has been done to allow its products back into the market. Putin recently criticised the lack of progress, emphasising that no points concerning Russia’s interests had been fulfilled. The withdrawal poses financial implications for grain prices. Benchmark Chicago wheat prices initially rallied but traded broadly flat at $6.60 a bushel on Monday. Overall, grain prices have fallen about a quarter since the agreement was first established, according to Citigroup. What do you think about the grain exports situation with Russia? And will they be able to improve things over the next few months?

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