HomeLogisticsWill the food crisis blow up again as Russia suspends its grain export deal?
By Economy Middle East, Economy Editor
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October 31, 2022 10:11 am

Will the food crisis blow up again as Russia suspends its grain export deal?

Wheat prices rise after Russia withdraws from deal
The ukranian Odessa sea port

Are we facing a new food crisis coinciding with rising numbers of impoverished people in the world?

Russia decided on Saturday to withdraw from an agreement allowing grain to be exported from Ukraine via the Black Sea, a decision that led to a rise in prices of wheat futures.

Moscow claimed that its Black Sea naval fleet was hit by a drone, saying that one of the drones came from a grain ship that is part of the Black Sea Initiative.

It said it suspended its role in the Black Sea agreement “indefinitely” after declaring that it could not “guarantee the safety of civilian ships” sailing under the convention after its Black Sea fleet was attacked.

The United Nations and Turkey were the main mediators in the Black Sea grain export agreement reached between Russia and Ukraine in July, ending a five-month Russian blockade of Ukraine’s ports which had cut off global supplies and raised food costs to record highs.

The agreement allowed for the safe passage of grains and oilseeds, which are among Ukraine’s most important exports. Since that breakthrough opening, global supply scarcity was erased, allowing the export of more than 9.5 million tons of corn, wheat, sunflower products, barley, rapeseed and soybeans.

It also cut global food prices by about 15 percent from their peak in March, according to a UN report.

Ukraine’s Ministry of Infrastructure reported Sunday that 218 ships involved in grain exports had been banned – 22 ships were loaded and stuck in ports, 95 were loaded and departed from ports, and 101 were awaiting inspections.

Under the agreement, the Joint Coordination Centre, which includes officials from the United Nations, Turkey, Russia, and Ukraine, approves the movement and inspection of ships.

Reuters reported on Monday that the United Nations, Turkey, and Ukraine continued to implement the agreement with a plan to cross 16 ships in effect today, despite Russia suspending its participation.

Because both Russia and Ukraine are among the world’s largest wheat exporters, it was only natural that wheat prices would rise. In Chicago, prices jumped as much as 7.7 percent to $8.9325 a bushel at the open on Monday before reducing gains to 5.9 percent. Corn rose 2.8 percent and soybean oil rose 3 percent, Bloomberg reported.

Volatility is expected to continue in the wheat market, as traders await more news from the Black Sea.

Fears have been reinforced that the recent setback in supply could increase global food price inflation and exacerbate hunger if prices continue to rise.

According to the Washington Post, the Russian move increases concerns about “global food insecurity.”

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Following Russia’s announcement to suspend its participation, UN Secretary-General António Guterres announced that he was deeply concerned, postponing his departure to participate in the Arab summit in Algiers, aiming of to push Moscow to reverse its decision.

Turkey has said it wants to continue supporting the continuation of the grain deal. The Turkish Defense Ministry announced that negotiations with the responsible actors would continue.

US President Joe Biden called the Russian move “outrageous” and said it would increase famine. His secretary of state, Anthony Blinken, accused Moscow of using food as a weapon.

The EU’s High Representative for Foreign Affairs and Security Policy, Josep Borrell, criticized Russia’s reimposition of a blockade on Ukrainian grain exports.

“Russia’s decision to suspend participation in the Black Sea agreement jeopardizes the main export route of much-needed grain and fertilizers to address the global food crisis resulting from its war on Ukraine,” he wrote on Twitter.