The Black Sea Grain Initiative has been extended again for 60 days. Russia agreed to extend the deal that allows Ukraine to ship grain through the Black Sea to parts of the world struggling with hunger.
Market analysts says they wouldn’t have been surprised by any outcome from the talks as Russia had threatened to bow out of the deal unless their concerns were ironed out. Moscow claimed that the facilitation of shipments of Russian food and fertilizer that were part of the deal had not been applied. They also wanted insurance restrictions lifted on exports and renewed access to the SWIFT banking system. It’s unclear if those concessions were made to get an agreement.
Allison Thompson, with The Money Farm says, “To see the deal extended definitely good thing keeps that market open. But again, so a lot of unknowns here moving forward. We’ll see how long it actually is gonna remain in place and what they’re if they’re going to continue to ship corn and wheat and where all of those nations continue to go.”
Some experts say the real key is when is Russia going to back off from undercutting the market with their own exports, not Ukraine’s.
Shawn Hackett, with Hackett Financial Advisors says, “I really don’t think the Ukraine corridor deal is that important anymore but given that the ending stocks are gone from Ukraine, I think it’s when Russia is ready to play a different car geopolitically. And so you know, we’re going to pull back on this week, we’re going to start to create some problems with wheat prices going up and see if we can pressure to politically some of our partners here to kind of see things our way and I think that might be what they’re setting up to do here.”
Thompson says corn and especially wheat prices reacted negatively to the news. However, she didn’t think there was much war premium in the markets. Thompson, “We’ve take out a lot of war premium to be honest with you across the board. So, we are at pre-war levels, especially on the corn side and wheat for that matter. So, I think that the fundamentals remain strong enough, I think we should be able to maintain levels here.”
In talks last week, Ukraine’s Deputy Prime Minister said the grain deal “should be extended for a longer period of time and expanded” to “give predictability and confidence” to markets. Moscow said it opposed an expansion, then opted for another shorter extension.
