Wheat and corn exports out of the Black Sea region are at risk again. Ukrainian officials say Russia’s recent actions to block inspections of ships under the Black Sea grain initiative means the grain deal is facing a murky future.
That’s as the area was still able to see record wheat exports over the past year, despite the war, largely thanks to the grain deal ensuring grain exports continued to flow out of the area.
According to Farm Journal Washington correspondent Jim Wiesemeyer, the situation is growing more tense. Wiesemeyer says Ukraine’s restoration ministry is now saying the Black Sea grain initiative is in danger of being shut down after Russia again blocked inspections of ships under the deal.
“For the second time in nine months of operation of the Grain Initiative, an inspection plan has not been drawn up, and not a single vessel has been inspected. This threatens the functioning of the Grain Initiative,” the restoration ministry said.
The Black Sea Grain Deal extension is positive for consumers
Wiesemeyer reports Russia is now saying an extension of the deal is “still not that rosy,” as it reiterated the need to improve conditions for exports of its grains and fertilizers. More in Russia/Ukraine section.
Russia Blames the West
The recent developments come as earlier this month, the Russian ag minister says Russia won’t renew the grain deal until the West’s sanctions on Russian food and fertilizer are lifted. Even senior Russian diplomat Mikhail Ulyanov commented on the situation on Friday, saying the West still has time to remove “obstacles” hindering the implementation of the Black Sea grain deal before a deadline set for May 18.
As a result of the growing tensions, wheat markets continue to respond.
“Every time we’ve seen this kind of come around, and these flares that it doesn’t look like the grain deal is getting renewed, we’ve seen a 25¢ to 50¢ rally in the wheat market. And that’s just kind of the nature of the game right now,” says Ben Brown, an Extension agricultural economist with the University of Missouri.
Poland and Hungry’s Ban on Grain From Ukraine
The situation now extends beyond Ukraine and Russia. Wiesemeyer also reports Poland and Hungary have banned imports of grain from Ukraine and grain transit through their countries despite a warning from the European Union (EU) that the unilateral actions would go against the block’s trade policies. He says the move seeks to protect their farmers, which have staged protests in recent months due to a grain glut and crashing prices. Poland’s ban is set to expire in June.
Wiesemeyer reports the EU tariff issue goes back to after Russia invaded Ukraine. That’s when the EU scrapped tariffs and quotas on Ukrainian grain imports, seeking to help the country that wasn’t able to export its product due to logistical problems caused by the war and blocked Black Sea ports.
Upcoming Crop at Risk
Dan Basse, president of AgResource Company, says intense challenges in Ukraine are dimming the outlook for the upcoming crop there.
“The Ukrainians are struggling mightily, as you can imagine,” Basse says. “They can’t find fertilizer, seed supplies are several years old, the price of diesel is now up to $34 a gallon. Imagine farming with that. And so, numbers will be coming down. I think, actually, this year’s Ukrainian crop export program will be well below last year.”
And he says as Russia works to gain control of its domestic grain export program, it could be Russian farmers who suffer.
“We still believe they’ll be able to get some technology from Syngenta and maybe Bayer and some others on the seed side, but longer term, I think there’s going to be a drag in production out of the Black Sea in general, including Russia and Ukraine."
Before the invasion, both Russia and Ukraine accounted for:
31% of world wheat trade
30% of world barley trade
29% of sunflower oil trade
At the time of the initial invasion, Basse cautioned the situation could realign world trade. A year later, the war is ongoing, yet Basse says exports from the region are not only holding strong but hitting record levels.
“I don’t think any of us would have imagined when the war started a year ago that we would have record wheat exports out of the Black Sea,” Basse says. “Now, principally, it’s a lot of Russia exporting 45 million or 46 million tonnes. As an analyst, I would not have thought that part of the world would have record exports of grain and wheat in a time of war. Nonetheless, that’s what’s happened.”
