Russia’s Re-joining of Black Sea Deal on Safe Passage Causes Wheat Prices to Fall.
- Russia’s decision to rejoin the UN-sponsored deal guaranteeing grain shipments out of Ukrainian harbors has led to a nearly 6% drop in world wheat prices. The move marks a sudden reversal of Russia’s previous suspension of the deal over the weekend. The Russian Defence Ministry received assurances from Ukraine that it would not use the UN-designated ‘safe corridor’ for shipments to attack Russian shipping in the future. The deal had been crucial in bringing down wheat and corn prices after Russia invaded Ukraine in February. Since the deal was agreed early in the summer, Ukraine has exported over 10 million tons of foodstuffs, mostly to poorer countries in Africa and Asia.
- Russia had withdrawn from the deal on Sunday after alleging that Ukraine used seaborne drones to attack the Russian Black Sea fleet in the Crimean port of Sevastopol, claiming that Ukraine had used the “grain corridor” to get closer to their targets. Ukraine, in turn, claimed to have damaged the Black Sea Fleet’s new flagship, the frigate Admiral Makarov, while Russia acknowledged only minor damage to a minesweeper and unspecified commercial ships. The threat of renewed attacks on Ukrainian shipping had caused prices to jump as much as 9% on Monday before Moscow started to back-pedal.
- U.S. wheat futures were down 5.7% at $850.50 a bushel, corn futures were down 2.1%, and soybean futures were down 0.7% by 07:30 ET (11:30 GMT). This marks a drop from the prices seen on Monday after the attack on Sevastopol. Analysts believe that Russia will be hesitant to attack a commercial vessel when countries in Africa and Asia are closely watching.