After a see-sawing two months of intense discussions, negotiators from Russia, Ukraine, Turkey and the United Nations have finally broken ground on a much-awaited joint agreement to facilitate grain exports through the Black Sea.
Both countries are systemically important to the global agricultural trade. According to the Food and Agriculture Organization’s (FAO) research, in 2021, either one or both countries were ranked in the top three global exporters of wheat, barley, maize, rapeseed and rapeseed oil, sunflower seed and sunflower oil.
After the Russian invasion of Ukraine in late February, agricultural supply chains have been left mangled, with commodities prices racing to fresh highs amid ongoing fears of global food shortages and acute hunger in some regions.
Earlier this month, The Wall Street Journal revealed that the Russian military had blockaded 6 of Ukraine’s 18 ports in the Black Sea, routes that channel over 95% of Ukraine’s grain exports.
With Ukraine accounting for an estimated 10% of global wheat exports and being commonly known as the “breadbasket of Europe”, these disruptions have had far-reaching international consequences.
An S&P Global Commodity Insights report noted that during MY (Marketing Year) 2022-23, Ukraine has exported approximately 119,000 MT of wheat, 52% lower than the previous year.
Following relentless aerial bombing and occupation of Ukrainian territory, the Kyiv School of Economics estimated that 4 million tons of grain storage silos were destroyed or had become inaccessible, while over $600 million worth of crops were damaged or seized by Russian forces amid allegations of theft.
Recent price moves
Wheat futures transacted at the Chicago Board of Trade surged to record highs of 1425.25¢ in early March
