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17 Jul, 2023 12:13

Wheat prices surge after Russia’s grain deal announcement

Moscow has officially halted its participation in the Black Sea grain export agreement, the Kremlin has said
Wheat prices surge after Russia’s grain deal announcement

Wheat prices soared on Monday following the announcement of Russia discontinuing its participation in the UN-facilitated arrangement for exporting Ukrainian grain, known as the Black Sea initiative, trading data showed.

August futures on the Chicago Mercantile Exchange rose 4.24% to $6.89 a bushel within minutes after the news broke. The increase somewhat subsided later, with the futures trading up 2.9% around 11:30 GMT. Corn and soybeans futures also saw increases.

Earlier on Monday, Moscow notified Ankara, Kiev, and the UN secretariat that it refused to extend the deal guaranteeing a safe trade corridor for vessels to export Ukrainian grain out of Black Sea ports. According to Presidential Spokesman Dmitry Peskov, Russia will return to the deal when all parties concerned implement the previously agreed steps.

The agreement, mediated by the UN and Türkiye and signed in July 2022, has been repeatedly extended since then and expires on July 18. Accompanying the deal was a Russia-UN memorandum aimed at facilitating Russian agricultural exports, which, although not directly targeted by Western sanctions, have faced problems due to the restrictions.

The memorandum, among other things, called for the reconnection of Russia’s major agricultural lender, Rosselkhozbank, to the SWIFT payment system, and lifting Western sanctions that posed problems for insurance and logistics of Russian cargo. However, no progress has been made with regard to Russia’s benefits from the agreement.

Russia repeatedly warned that unless its demands were met, it had no reason to remain in the grain deal.

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