SINGAPORE — Russia’s weekend backtrack from a United Nations (UN)-brokered deal to export Black Sea grains is likely to hit shipments to import-dependent countries, deepening a global food crisis and sparking gains in prices.
Hundreds of thousands of tons of wheat booked for delivery to Africa and the Middle East are at risk following Russia’s withdrawal, while Ukrainian corn exports to Europe will take a hit, two Singapore-based traders said.
Russia on Saturday suspended participation in the UN grain deal for an “indefinite term,” after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.
“If I have to replace a vessel which was due to come from Ukraine, what are the options? Not much really,” said one Singapore-based grains trader who supplies wheat to buyers in Asia and the Middle East.
Earlier this year global wheat prices Wv1 jumped to an all-time high and corn hit a 10-year top as Russia’s invasion of Ukraine added fuel to a rally set off by adverse weather and coronavirus supply disruptions.
Australia, a key wheat supplier to Asia, is unlikely to be able to fill any supply gap, with shipping slots booked right up to February, traders said.
No ships moved through the established maritime humanitarian corridor on Sunday. The UN, Turkey and Ukraine, however, pressed ahead to implement the Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward, despite the withdrawal of Russia.
“We have to see how the situation unfolds. It is not clear if Ukraine will continue to ship grains and what happens to Russian exports,” said the Singapore-based grains trader.
Chicago wheat futures on Monday jumped more than 5% and corn rose over 2%.
Asian buyers recently booking Ukrainian wheat cargoes include Indonesia, the world’s second-largest importer of the grain, although the region typically relies on Australia and North America.
In recent deals, Indonesian millers bought four cargoes or around 200,000 tons of Ukrainian wheat for November shipment in deals signed over the last few weeks, traders said.
Last week, a government agency in Pakistan bought about 385,000 tons of wheat in a tender likely to be sourced from Russia and Ukraine.
“We are not sure if Russia will continue to export wheat or it will be safe for vessels carrying Russian wheat to ship from the Black Sea even as Ukrainian exports remain blocked,” said a second Singapore-based trader at an international company.
Under the UN-brokered grains deal, a Joint Coordination Centre (JCC) made up of UN, Turkish, Russian and Ukrainian officials agree on the movement of ships and inspects the vessels. More than 9.5 million tons of corn, wheat, sunflower products, barley, rapeseed and soy have been exported from the Black Sea since July. — Reuters