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Russia, Ukraine disagreements put Black Sea Agreement back in uncharted waters

Disagreements between Russia and Ukraine over agriculture exports have put the future of the Black Sea Grain Initiative in jeopardy once again.

Jim McCormick with AgMarket.Net tells Brownfield Russia is demanding to increase its exports like fertilizers or the deal ends. “Every time we get near the deadline, the Russians complain that something’s not going right. They’re not getting grain out, they’re not getting fertilizer out. The grain that is getting out is going to the wrong countries. So it’s a little bit of the boy who cried wolf.

The agreement was inked in August, renewed in November, March and earlier this month and will expire July 18 without an extension.

He tells Brownfield the uncertainty hasn’t had much impact on commodity markets. “As they brought this up, coming out of a three-day weekend, the market kind of shrugged it. I was a little bit surprised. I mean, there was a missile, supposedly, that hit one of the Odessa ports and did some damage, but even that wasn’t enough to kind of spook the market.”

But, McCormick says, producers should still be cautious. “If you’re playing the wheat market from the long side or short side, whatever way you’re playing it, if they would actually do it and they actually would actually shut down that grain corridor for whatever reason, you probably would get a pretty violent reaction because right now there is hardly any, I would argue, premium built into the market.”

Russia says a small percentage of ag products shipped from Ukraine have gone to countries in need.

Data from the United Nations show China, Spain and Turkey were the top three destinations for ships sailing from Ukrainian ports.