World food supplies at risk as Russia withdraws from Black Sea deal

Russia’s weekend backtrack from a U.N.-brokered deal to export Black Sea grains is likely to hit shipments to import-dependent countries, deepening a global food crisis and sparking gains in prices.

Hundreds of thousands of tonnes of wheat booked for delivery to Africa and the Middle East are at risk following Russia’s withdrawal, while Ukrainian corn exports to Europe will get knocked lower, two Singapore-based traders said.

Russia on Saturday suspended participation in the U.N. grain deal for an “indefinite term”, after what it said was a major Ukrainian drone attack on its Black Sea fleet in Crimea.

“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 5% and corn rose over 2% from the fears over supplies.

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, traders said.

“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.

WHEAT, CORN & VEGOILS

Asian buyers booking Ukrainian wheat cargoes include Indonesia, the world’s second-largest importer of the grain, although the region typically relies on Australia and North America.

“We are not sure if Russia will continue to export wheat or it will be safe for vessels carrying Russian wheat to ship from the Black Sea even as Ukrainian exports remain blocked,” said a second Singapore-based trader at an international company.

Ukraine’s corn exports to Europe booked for November are likely to be hit as well.

“As far as Europe is concerned, corn is a bigger issue than wheat as we are getting into peak season for Ukrainian corn in November,” said the second trader.

Russia’s decision is expected to support world vegetable oil prices as it threatens Ukraine’s sunflower oil exports to key destinations, including top edible oil importer India.

Malaysian palm oil futures jumped more than 4% on Monday, October 31.

Source: Reuters

To read the full original article, please go to: https://www.reuters.com/world/world-food-supplies-risk-russia-withdraws-black-sea-deal-2022-10-31/

Sharing is caring!