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

  • After Russia’s withdrawal, the supply of wheat to Africa, M. East is in danger
  • Europe is facing a corn shortage due to Ukraine’s supply being affected
  • Australia is unlikely to help as a shipping slot booked until February
  • Palm prices rose 4% on Ukraine’s sunflower oil supply crisis

SINGAPORE, Oct 31 (PTI) – Russia’s weekend withdrawal from a UN-brokered deal to export Black Sea grains is likely to affect shipments to import-dependent countries, further exacerbating the global food crisis. May deepen and prices will increase.

Millions of tonnes of wheat booked for delivery to Africa and the Middle East are at risk after Russia’s withdrawal, two traders in Singapore said, while Ukrainian corn exports to Europe would be reduced.

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

“If I have to change the ship coming from Ukraine, what are the options? There really aren’t many,” said a Singapore-based grain trader who supplies wheat to buyers in Asia and the Middle East.

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Chicago wheat futures rose more than 5% on Monday and corn more than 2% on supply fears.

Global wheat prices hit their highest level earlier this year and corn hit a 10-year high as Russia’s attack on Ukraine fueled a rally triggered by adverse weather and Covid-19 supply disruptions. included

Australia, a key wheat supplier to Asia, is unlikely to be able to fill any supply gaps, with shipping slots booked until February, traders said.

Shares in Australia’s GrainCorp ( GNC.AX ) – which jumped more than five-fold in H1 profit due to supply disruptions stemming from the Russia-Ukraine conflict – rose more than 7%.

No ships passed through the maritime humanitarian corridor established on Sunday. The United Nations, Turkey and Ukraine, however, moved to implement the Black Sea grain deal and agreed on a transit plan for 16 ships to go ahead on Monday, despite Russia backing out.

“We will have to see how the situation unfolds. It is not clear whether Ukraine will continue to send grain and what will happen to Russian exports,” said a Singapore-based grain trader.

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Wheat, corn and vegetables

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.

In recent deals, Indonesian millers have bought four cargoes, or about 200,000 tonnes, of Ukrainian wheat for November shipment in deals signed in the past few weeks, traders said. Some Vietnamese feed mills that bought Ukrainian wheat are also likely to suffer.

Last week, a government agency in Pakistan bought about 385,000 tonnes of wheat in a tender likely to be bought from Russia and Ukraine.

“We are not sure whether Russia will continue to export wheat or whether it will be safe for ships carrying Russian wheat from the Black Sea even though Ukrainian exports have been stopped,” said another Singapore-based trader at an international company.

Ukraine’s corn exports to Europe, booked for November, are also likely to be hit.

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

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

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

Under the UN-brokered grain deal, a Joint Coordination Center (JCC) made up of UN, Turkish, Russian and Ukrainian officials agrees on ship movements and inspects ships. More than 9.5 million tons of corn, wheat, sunflower products, barley, rapeseed and soy have been exported from the Black Sea since July.

Although global agricultural commodity prices have hit record highs in recent months, local retail food prices remain high and face further volatility.

“Typically, it takes about two months for higher grain prices to filter through the supply chain and affect consumers at the retail level,” said a Sydney-based analyst.

“But food processors don’t have a lot of forward coverage, so it’s likely to be much faster.”

Reporting by Naveen Thukral; Editing by Tom Hogg

Our Standards: The Thomson Reuters Trust Principles.


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