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| Ship On Black Sea [Photo Credit: Naval News] |
As a result of Russia's weekend withdrawal from an UN-brokered agreement to export grains from the Black Sea, shipments to import-dependent nations are expected to be impacted, which will exacerbate the world food crisis and drive up prices.
Following Russia's withdrawal, hundreds of thousands of tonnes of wheat scheduled for delivery to Africa and the Middle East are in jeopardy, while Ukrainian corn exports to Europe will be reduced, according to two Singapore-based traders.
After what it claimed was a significant Ukrainian drone attack on its Black Sea fleet in Crimea, Russia on Saturday announced it would stop its participation in the UN grain deal for an "indefinite period."
“If I have to replace a vessel which was due to come from Ukraine, what are the options? Not much really,” said one Singapore-based grains trader who supplies wheat to buyers in Asia and the Middle East.
Chicago wheat futures on Monday jumped more than five per cent, and corn rose over two per cent from the fears over supplies.
Earlier this year, global wheat prices jumped to an all-time high, and corn hit a 10-year top as Russia’s invasion of Ukraine added fuel to a rally set off by adverse weather and COVID-19 supply disruptions.
Traders said Australia, a key wheat supplier to Asia, is unlikely to be able to fill any supply gap, with shipping slots booked right up to February.
Shares in Australia’s Graincorp (GNC.AX) posted a five-fold jump in H1 profit due to supply constraints arising from the Russia-Ukraine conflict rose more than seven per cent.
No ships moved through the established maritime humanitarian corridor on Sunday.
The United Nations, Turkey and Ukraine, however, pressed ahead to implement the Black Sea grain deal and agreed on a transit plan for Monday for 16 vessels to move forward despite the withdrawal of Russia.
“We have to see how the situation unfolds. It is not clear if Ukraine will continue to ship grains and what happens to Russian exports,” said the Singapore-based grains trader.
(Reuters/NAN)