Russia says it is refusing to extend the Black Sea Grain Initiative—a U.N.-backed deal that has allowed Ukraine to export grain and other food items during the ongoing war.
“You’re dealing with Russia and it’s hard to predict what they want,” says Karl Setzer, Commodity Risk Analyst with AgriVisor, who says the impact may not be felt for several months if Russia continues to suspend the agreement.
“I don’t think short-term it’s going to be a huge factor. We’re really not seeing big exports out of that region this time of the year anyway. They start to pick up a few months from now, so we do have some time to see an agreement reached,” according to Setzer.
He adds that grain could still find its way out of Ukraine.
“That doesn’t mean the corridor can’t stay open or that Ukraine can’t make exports,” says Setzer. “It’s just a lot more of Ukraine’s grain will have to leave via land routes through the European Union or down the Danube River and they just can’t see the volumes come out that way.”
However, Setzer believes that Russia may end up feeling pressure from China to eventually return to an agreement and continue allowing safe passage for ships carrying exports through the Black Sea corridor.
“I do think we’ll see some type of a resolution, but I think it’s probably going to be three or four months down the road,” says Setzer. “One of the big uncertainties is China. If China steps in and says they need to get commodities out of the Black Sea, it will expedite Russia’s opinion on whether or not they should open it back up.”
In the short term, Setzer adds that the grain markets are more likely to impacted by the weather forecasts across the Midwest.
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