Moscow exits Black Sea grain deal


On July 17, Russia rejected a further extension of the Black Sea Grain Initiative, or so-called grain deal, an agreement initially concluded in Istanbul in July 2022 to ensure the safe export of Ukrainian grain and foodstuffs through humanitarian corridors in the Black Sea. 

Moscow said, however, that it may consider returning to the Istanbul initiative if the provisions of the deal allowing for exports of Russian agricultural products to world markets can be duly implemented. The international community denounced Moscow’s decision, while Turkey, which had brokered the Black Sea Grain Initiative jointly with the United Nations, expressed hope that the deal could be reanimated. Although upbeat statements by Turkish President Recep Tayyip Erdogan failed to prevent grain prices from soaring on major commodity exchanges, experts claimed that “the price increase was largely speculative.”

SovEcon Director Andrei Sizov said in an interview with Kommersant that the market is likely questioning the seriousness of Russia’s rhetoric as it expects Ukrainian food exports to continue. According to Sizov, in general Ukraine will be able to fulfill its grain export plan for this season even without using deep-water terminals on the Black Sea. 

Ukraine is already making active use of the Danube as a route for grain exports and recently sent the first Handymax class vessel via this channel, carrying around 20,000 metric tons of corn. Also, it exports foodstuffs via the European Union and to customers within the bloc itself. As for Russia, in July it may export a record 3.7 million to 4.1 million metric tons of wheat against an average volume of 2.8 million metric tons, SovEcon has said.

Meanwhile, Russian farmers’ associations welcomed the news that Moscow had terminated its participation in the grain deal. The pact had led to price discounts that benefited neither the country at large nor Russian farmers and exporters. 

Russian Grain Union President Arkady Zlochevsky hailed the decision, terming it as the right move and saying it would prop up Russian wheat prices. “It [the deal] should never have been concluded at all,” he told Nezavisimaya Gazeta. 

Zlochevsky does not expect the deal’s suspension to cause any negative consequences for Russian farmers. On the contrary, the negative factors linked to it will now be eliminated, he argued, citing the marked Russian wheat price discount compared to the prices of Russia’s foreign competitors.

Oils and Fats Union Executive Director Mikhail Maltsev approved of Moscow’s decision to withdraw from what he described as an economically unprofitable agreement for his segment of the Russian agribusiness sector. The industry expert now expects global sunflower oil and meal prices to get back to normal, with corresponding export prices returning to a fair level.

The Black Sea agreements have been effectively terminated on Monday – the part of the deal concerning Russia has not been fulfilled, Russian presidential spokesman Dmitry Peskov told reporters in Moscow.

“The Black Sea agreements are no longer in effect. The deadline, as the Russian president said earlier, is July 17. Unfortunately, the part of the Black Sea agreement that concerns Russia has not yet been fulfilled. As a result, it has been terminated,” he said.

“As soon as the Russian part [of the deal] is fulfilled, the Russian side will immediately return to the implementation of this deal,” Peskov added.

He also noted that Russia’s position on suspending its participation in the grain deal was announced before the most recent terrorist act on the Crimean Bridge and this attack does not influence Moscow’s decision.

On July 22, 2022, a package of documents on the supply of food and fertilizers to the international market was signed in Istanbul. The agreements were originally concluded for a period of 120 days. They were extended for the same period last November. On March 18, 2023, Russia announced the extension of the deal for 60 days. The grain deal was extended for two more months on May 18.


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