Russia’s decision Monday to suspend the Black Sea Grain Initiative led to a short-lived rally in the wheat and corn markets, but concerns over global supplies of key commodities from Russia and Ukraine are set to climb, contributing to uncertainty over global inflation.
Kremlin spokesman Dmitry Peskov told reporters on Monday that the Black Sea agreements were no longer in effect as the part of the deal that concerned Russia had not yet been fulfilled, according to the Russian state news agency TASS. Russia’s decision is “important as both Russia and Ukraine are major corn and wheat exporters,” and both export other goods as well, said David Maloni, president of food service supply chain consulting firm Datum FS.
Still, by not renewing the deal, Russia is “potentially opening itself up to retaliatory attacks on its export infrastructure or merchant ships by Ukraine and others, which could upend the export of literally all commodities out of the Black Sea including oil and fertilizer,” said Teucrium’s Gilbertie. That’s a “major gamble on Russia’s part to extract concessions from the West, but withdrawal from the deal opens up an array of Black Swan possibilities for global commodity markets.
— Sal Gilbertie, Teucrium Trading The July World Agricultural Supply and Demand report from the U.S. Department of Agriculture show significant export estimates for 2022/2023 crop year, with world wheat exports at 45.5 metric tons for Russia, and at 16.8 million metric tons for Ukraine. ‘Muted’ effect for now The Black Sea Grain Initiative has been a “huge benefit” to Ukraine, Russia and the world, said Nicholson.