Russian President Vladimir Putin may back out of the Ukrainian grain export deal. He claims Ukraine is cheating on the UN-brokered export agreement and is vowing to look at revising the terms of the deal that allow Ukraine to export its grain via the Black Sea. He wants to limit the countries that can receive shipments saying Ukrainian grain exports are not going to the world’s poorest countries as originally intended, including Africa and others that are in dire need of food.
Putin told an economic forum that almost all the grain exported from Ukraine is going to European Union countries. He says only two of the 87 ships, carrying 60,000 tonnes of product, went to poor nations and further warned of a looming food crisis. He called the agreement brazen deception by the international community. However, market analysts tell us that’s not the case.
Allison Thompson, with The Money Farm says, “We do have reports that it has been going to the Middle East and African countries. So it’ll be interesting to see what his goal is with talking about it but definitely it appears that he might cancel the agreement and the incentive right now all together.”
Russia reportedly has a big wheat crop this year and prices have declined. Kent Beadle with CHS Hedging believes Putin is making a play to reduce export competition for that crop. “He says Russia would prefer to get the dollars from the wheat sales in order to continue to push forward with their war and finance that war.”
Beadle says the export deal is set to expire soon and so this is an early indication that Putin will likely renegotiate the terms or not agree to a deal at all. He says the wheat market is also fearful of the possible environmental disaster and crop contamination with destruction of a Ukraine nuclear power plant, the largest in Europe. Plus, Ukrainian grain officials are estimating 40 to 60-percent of Ukraine’s winter grains won’t get planted this fall due to the war.
