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Russia Freezes Wartime Deal Allowing Ukraine to Export Grain

Randy Mancini 5 Jul 17

In a move that threatens the global food supply, Russia is suspending an agreement that allowed Ukraine to export grain.

The move will cut off shipments to Africa, the Middle East, and Asia where people are already suffering from food scarcity and high prices.

Kremlin spokesman Dmitry Peskov said Russia would suspend the Black Sea Grain Initiative until its demands to get its own food and fertilizer to the world are met. While Russia has complained that restrictions on shipping and insurance have hampered its agricultural exports, it has shipped record amounts of wheat since last year.

"When the part of the Black Sea deal related to Russia is implemented, Russia will immediately return to the implementation of the deal," Peskov said.

slider img 2The suspension marks the end of an accord that the U.N. and Turkey brokered last summer to allow food to leave the Black Sea region after Russia's invasion of its neighbor worsened a global food crisis. The initiative is credited with helping lower soaring prices of wheat, vegetable oil, and other food commodities. The July agreement brought down global food prices by about 15% from their peak in March, according to the U.N.

Then last October, Russia resumed the grain blockade of Ukraine, but in November decided to rejoin the wartime agreement allowing Ukrainian grain and other commodities to be shipped to world markets.

Ukraine and Russia are both major global suppliers of wheat, barley, sunflower oil, and other affordable food products that developing nations rely on.

The Russian suspension of the deal sent wheat prices up about 3% in Chicago trading, to $6.81 a bushel, still about half what they were last year during last year's peaks, but fell later in the day.

Analysts don't expect more than a temporary bump to global food commodity prices because places like Russia and Brazil have ratcheted up wheat and corn exports. But food insecurity worldwide is growing as developing countries also struggle with severe weather, conflict, and economic crises. Finding suppliers outside Ukraine that are farther away also could raise costs.

Ukrainian President Volodymyr Zelenskyy said he wanted to keep the initiative going even without Russia's safety assurances.

"We are not afraid," he said. "We were approached by companies that own ships. They said that they are ready, if Ukraine gives it, and Turkey continues to let it through, then everyone is ready to continue supplying grain."

Turkish President Recep Tayyip Erdogan said the country's foreign minister would speak with his Russian counterpart Monday — and that he was hopeful the deal would be extended.

The Black Sea Grain Initiative has allowed three Ukrainian ports to export 32.9 million metric tons of grain and other food to the world, according to the Joint Coordination Center in Istanbul.

Meanwhile, Russia's wheat shipments hit all-time highs following a large harvest. It exported 45.5 million metric tons in the 2022-2023 trade year, with another record of 47.5 million metric tons expected in 2023-2024, according to U.S. Department of Agriculture estimates.

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