Ukraine extends Black Sea Grain Initiative deal by 120 days

Ukraine's Minister of Infrastructure Oleksandr Kubrakov announced Nov. 17 that the country has agreed to a deal to extend the Black Sea Grain initiative.

"This decision was just taken in Istanbul. The United Nations and Turkey remain guarantors of the Initiative," the ministry said in a statement.

"We officially appealed to the partners of the initiative with a proposal to extend the initiative for at least one year and to include Mykolaiv port in it."

As of Nov. 16, 11.09 million mt of grains and other foodstuff have been exported from the three Ukrainian ports of Pivdenniy, Odessa and Chornomorsk since the Black Sea Grain Initiative began, according to a statement released by the initiative's Joint Coordination Centre.

Following the announcement of the extension, the UN Secretary-General Antonio Guterres released a statement saying the UN was "fully committed to supporting the Joint Coordination Centre so that this vital supply line continues to function fully. The United Nations is also fully committed to removing the remaining obstacles to exporting food and fertilizers from the Russian Federation."

Market participants had been anticipating the extension of the Black Sea Grain Initiative in recent days, although there were question over whether conditions would be imposed.

"[Prices of wheat to Southeast Asia] should gradually weaken, but the extension has already been priced in and [there is a] need to clear the backlog first," said a wheat buyer. Ukrainian 11.5% protein wheat was heard at $370/mt CFR Southeast Asia for one discharge spot for prompt shipments, according to market sources.

On the corn market, prices are also expected to fall. Cash corn prices may start to fall on the news of the extension but premiums will likely hold, said a trader.

Traders also said inspection rates for vessels under the Initiative need to speed up for more significant export volumes. "Inspectors are slowing export potential as well so we need to see some improvements there," said another trader.

With greater optimism on increased export flows, market participants are still unsure whether the cost of insurance and freight could come under pressure. However, as most buyers are well-covered for spot shipments, demand is expected to be thin.

Australian wheat prices have came under pressure on the back of the announcement, with lower market indications Nov. 17.

Platts, part of S&P Global Commodity Insights, assessed Australian Premium White wheat at $370/mt Nov. 17.