Is Russia's Threat to Nix Black Sea Grain Deal a Potential Ploy to Push Wheat Prices Higher?
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Russia is now saying it will only extend its Black Sea grain deal if sanctions are lifted on its own agricultural products. The deal, which was brokered last year, allowed for safe passage of Ukrainian ag products.
As first reported by Reuters, Moscow says payment, insurance, and other restrictions are “barriers” to exporting its products, including products such as fertilizer.
The grain deal is set to expire on March 18. Turkey and the UN helped broker the original grain deal in 2022, and with chances that Russia will not renew the deal, the news sent wheat prices higher on Thursday.
Could the threat of no grain deal turn into reality, which would hinder the flow of grain from that area? Brian Grete, editor of Pro Farmer, says it could, but he also says this isn’t a surprising move by Russia.
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“They have record exports planned for wheat the second half of the marketing year, and so it would behoove them to talk up wheat prices if they could, just with the amount of exports going out,” says Grete. “I think this will go down to the 11th hour, the same as it did in November, and we'll get an extension to the deal. It's a matter of whether it's another 120 days, or whether it's a year as Ukraine wants. And when all said and done, though I do think the extension will be granted, and Russia will probably get a few things they’re demanding, we aren't going to lift the sanctions from the West.”
Ukraine is asking for the new grain deal to be extended to a year. Reports currently show Ukraine exports nearly 3 million tonnes of agricultural products a month under the agreement. However, Ukraine is asking for additional ports to be added under the deal. Ukraine’s Deputy Minster for Communities, Territories and Infrastructure Development says the country could double that amount if ports in Odesa Oblast are included, and up to 8 million tonnes if Mykolaiv is added to the agreement.
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