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Black Sea grain initiative extension still in doubt

Russia warns grain deal will end May 18 unless demands are met on its own food and fertilizer shipments.

Bloomberg

May 11, 2023

2 Min Read
Export ships in sea
Bloomberg

The latest talks on extending Ukraine’s grain-export deal ended without a definitive agreement, with Russia reiterating its threat to withdraw from the pact in one week.

Negotiations in Istanbul over the past two days between officials from Ukraine, Russia, Turkey and the United Nations made “positive and constructive” progress, according to the Turkish defense ministry. However, Russia repeated a warning on Thursday that the deal will end May 18 unless its demands for progress toward removing obstacles on its own food and fertilizer shipments are met.

Grain futures in Chicago and Paris declined as Turkey said the parties agreed to continue talks at a technical level to ensure the deal is upheld. Further negotiations will be held online, Oleksandr Kubrakov, Ukraine’s infrastructure minister, said in a statement. 

Ukraine’s crop exports recently slowed significantly as vessel inspections through the Black Sea corridor were repeatedly disrupted and restrictions were placed on cargoes bound for eastern Europe. 

During the talks, Ukraine stressed that the grain initiative must be expanded and extended for a longer period to provide certainty to domestic and global markets, Kubrakov said. The first priority is to resume registration of inbound vessels under the corridor and ensure inspections are conducted “without artificial delays.”

No decision has been made on a new meeting at the deputy minister level, according to a Tass report, citing Russia’s Deputy Foreign Minister Sergey Vershinin. He urged “not to get ahead of ourselves” and wait until the May 18 deadline to reach agreement.

The proposals discussed included reopening the Togliatti-Odesa ammonia pipeline and improving the Joint Coordination Centre — which conducts the ship inspections — to ensure “stable operations,” the UN said. The parties agreed to engage further on those elements.

Wheat and corn futures in Chicago traded lower, while soybeans rose. 

Aside from the status of the deal, markets are eyeing increases to Brazil’s corn and soy forecasts and a major U.S. government crop report due Friday. In Paris, milling wheat edged lower.

© 2023 Bloomberg L.P.

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