A deal allowing Ukraine to export crops from key ports via the Black Sea is set to be extended, with Russia agreeing to stay in the beleaguered pact for now, according to Turkish officials.
(Bloomberg) — A deal allowing Ukraine to export crops from key ports via the Black Sea is set to be extended, with Russia agreeing to stay in the beleaguered pact for now, according to Turkish officials.Â
The agreement — brokered by Turkey and the United Nations — would keep open a major trade route amid Russia’s war in Ukraine, bolstering global food supplies. Moscow had threatened to withdraw from the deal if obstacles to shipments of its own crops and fertilizer weren’t removed.
An announcement is expected Wednesday, said the officials, who declined to be named as the information is private.Â
While an extension would be a step toward keeping the agreement alive, dysfunction among the parties involved has blunted its effectiveness. Ukraine has said Moscow is purposefully slowing the pace of exports, and the corridor is now nearly empty, with no inbound ships cleared since early May.
Markets reacted cautiously as traders gauge the pact’s future. Wheat futures in Chicago fell 2% by 1:36 p.m. in London, erasing an earlier gain. Corn, the top commodity shipped under the initiative, declined 2.6%.
Grain shipments through the Black Sea have been hamstrung by repeated disruptions in the joint inspections of vessels. The pace of ship examinations going forward will be crucial for Ukraine’s ability to offload its next harvests, with wheat collected from July.
Restrictions on other export routes via the European Union have added to the hurdles for local farmers. Several eastern EU countries have sought to limit crop trade with Ukraine, claiming the flows are harming their own growers.
Despite Moscow’s grievances, Russia is expected to ship record volumes of wheat this season, while its exports of fertilizers are climbing back to pre-war levels.
The agreement has enabled the safe shipment of about 30 million tons of crops since it was inked in July 2022. That has helped bring down global food-commodity prices that had spiraled to a record in the aftermath of Russia’s invasion. China and Spain rank among the top destinations for Ukraine grains.
An extension would come at a crucial time for Turkish President Recep Tayyip Erdogan, who is seeking re-election in a runoff vote on May 28. As one of the original mediators that helped broker the deal last year, Erdogan used his role in the negotiations to portray himself as a global leader and boost his appeal to the electorate.
Ukraine’s Deputy Infrastructure Ministry Yuriy Vaskov said via text that it was too early to comment on a possible deal. Kremlin spokesman Dmitry Peskov said on a conference call with reporters earlier that Russia would announce its decision in due course, Tass reported.
A UN spokesperson for the Black Sea Grain Initiative in Istanbul declined to comment.
–With assistance from Volodymyr Verbyany, Torrey Clark, Daryna Krasnolutska, Jasmine Ng and Onur Ant.
(Updates with market reaction in fifth paragraph, context on Turkish election.)
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