FACTBOX: Black Sea grain deal fate uncertain days ahead of one-year anniversary

The Black Sea Grain Initiative is again in jeopardy, just days before its one-year anniversary, as both Russia and Ukraine expressed concerns on whether the agreement could be extended beyond July 18.

The United Nations and Turkey brokered the Black Sea Grain Initiative between Russia and Ukraine on July 22, 2022, to ensure food supplies through the Black Sea, which were stranded following Russia's invasion of Ukraine. The deal was renewed for 60 days May 18.

The fate of the Black Sea Grain Initiative is again in jeopardy, said the UN in its monthly update of its Agricultural Market Information System (AMIS) on July 6.

However, any stoppage of exports under the deal may impact global supplies of wheat and corn. In marketing year 2023-24 (July-June), Ukraine and Russia together will account for nearly 27% of global wheat trade and Ukraine may supply almost 10% of global corn shipments, data from the US Department of Agriculture showed.

Infrastructure

** On July 3, Russia's permanent representative to the UN Gennady Gatilov said that Russia has no grounds to agree on maintaining status quo on the Black Sea Grain Initiative as it has repeatedly extended the initiative in hopes of positive changes.

** Russia has made a series of demands, including reconnection of the specialized Russian Agricultural Bank to the SWIFT payments system, resumption of the Tolyatti-Odessa ammonia pipeline, unblocking the frozen assets of Russian companies, among others.

** Ukrainian officials are also of the view that Russia may walk out of the deal in July. Olha Trofimtseva, Ukraine's foreign ministry ambassador at large, said late June 21 on the Telegram messaging app that "The grain corridor: 99.9% that Russia will leave it in July."

** The deal covers three Black Sea ports of Ukraine—Odesa, Chornomorsk and Pivdenny. However, Russia has not allowed vessels to register for Pivdenny, the largest of these.

** Ukraine has blamed Russia for blocking vessels to Pivdenny and slowing overall inspections since April.

** The Ukrainian government has been developing alternatives to continue exporting grains, including the expansion of the capacity of the Danube region and commissioning of additional crossing points and dry ports on the western border with Poland and Romania, in case Russia walks out of the Black Sea grain deal, Ukraine's First Deputy Minister of Agrarian Policy and Food Taras Vysotskyi said June 26.

Trade

** Since August 2022, 32.8 million mt farm products have been exported through the grain corridor, data from the Black Sea Grain Initiative Joint Coordination Centre showed.

** So far, 16.8 million mt corn and 8.9 million mt wheat has been exported.

** In MY 2023-24 (July-June), Ukraine is expected to export 10 million mt wheat against 15 million mt in the previous year and 18.6 million mt corn in MY 2023-24, compared with 25.4 million mt in the previous year, Victoria Sinitsyna, senior grains analyst at S&P Global Commodity Insights said.

** Russia is expected to export 42 million mt wheat in MY 2023-24, against 44 million mt estimated for the previous year, Sinitsyna added.

** Ukraine is expected to produce 18.1 million mt wheat in MY 2023-24 against 21 million mt harvested in MY 2022-23, and 25.4 million mt corn in MY 2023-24 against 27 million mt in the previous year, Sinitsyna added.

** For Russia, wheat output in MY 2023-24 is seen at 86 million mt, against 92 million mt seen in the previous year, Sinitsyna added.

Prices

** Platts, part of S&P Global, assessed Russian 12.5% wheat FOB at $231/mt and Ukrainian 11.5% wheat FOB at $205/mt on July 7, both unchanged on the day.

** Platts assessed Ukrainian corn FOB at $194/mt on July 7, down $2/mt on the day.

** Platts assessed sunflower oil FOB Ukraine, Black Sea at $820 on July 7, up $19/mt on the day.

** The Black Sea sunflower oil price rose on July 7, with Ukrainian sellers reluctant to sell amid tighter supply conditions in the market for Ukraine-origin product.