UN reaches out to Russia with proposals to extend Black Sea grain deal beyond July 17

United Nations Secretary-General Antonio Guterres has reached out to Russia earlier this week proposing ways to facilitate Russia's food and fertilizer exports with an aim to continue the Black Sea grain deal beyond July 17, a statement from the UN said July 12.

"As part of his ongoing efforts in this regard, the Secretary-General sent a letter yesterday [July 11] to the President of the Russian Federation, Vladimir Putin, outlining a proposal aiming to harmonize the vital further implementation of the Memorandum of Understanding with the vital need to keep the Black Sea Initiative operational," Stéphane Dujarric, spokesperson for the Secretary-General, told reporters.

The UN and Turkey brokered the Black Sea Grain Initiative between Russia and Ukraine in July 2022 to ensure food supplies through the Black Sea that were stranded following Russia's invasion of Ukraine. On May 18, the deal was renewed for 60 days until July 17.

A statement issued by Turkish President Recep Tayyip Erdogan July 12 said, "Negotiations continue for the extension of the Black Sea Initiative... We will continue to use our close dialogue with both our neighbors to extend the initiative and resolve the crises."

Russia has said that it may not extend the agreement beyond July 17 unless a series of its demands, including the removal of obstacles to Russian grain and fertilizer exports, are met.

The deal allows for the safe export of ammonia from Russia via Ukraine, apart from food items. However, so far ammonia has not been exported under the initiative.

Russia has been asking for resumption of ammonia supplies through a pipeline across Ukraine to the Black Sea port of Odesa that has been idle since 2022.

Over the past few months, Ukraine has raised concerns over the slowing pace of exports under the initiative and Russia's refusal to register ships for the Pivdenny port since the renewal of the deal May 18. The Pivdenny port is the deepest port on the Black Sea coast.

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 are expected to 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.

"The Secretary-General remains engaged with all relevant parties on this issue and expresses his willingness to further engage on his proposal with the Russian Federation," Dujarric said.

Russia's foreign ministry was not immediately available for an S&P Global Commodity Insights' request for comment on deal progress.

Platts, part of S&P Global Commodity Insights, assessed Russian 12.5% FOB wheat at $229/mt, and Ukrainian 11.5% FOB wheat at $202/mt on July 12, both down $2/mt on the day. Platts assessed Ukrainian FOB corn unchanged on the session at $194/mt on July 12.