A deal allowing Ukraine to export crops from key ports via the Black Sea will be extended by two months, Turkish President Recep Tayyip Erdogan said.
The agreement — brokered by Turkey and the United Nations — keeps 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.
Wheat futures in Chicago traded 2.8% lower by 3:37 p.m. in London after paring losses. Corn, the top commodity shipped under the initiative, declined 3.6%. Prices had eased earlier, on initial reports that an agreement was near.
While an extension keeps the agreement alive for now, dysfunction among the parties 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.
The pact was initially intended to run for 120 day periods, but Moscow previously only agreed to a 60-day extension in March. A shorter extension period creates more uncertainty for traders and shipowners, who are wary of their vessels getting stuck if the deal expires and the journey is incomplete.
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.
The extension also comes at a crucial time for 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, the Turkish president has used his role in the negotiations to portray himself as a global leader and boost his appeal to the electorate.
Author: Selcan Hacaoglu, Áine Quinn and Megan Durisin
