Kyiv-Moscow deal sends wheat prices tumbling

Ukraine remains wary of Russia attacking its grains ships

NEW YORK, United States (AFP) — Wheat prices tumbled Friday, retreating to levels last seen prior to the Russian invasion of Ukraine following a landmark agreement to unblock Ukraine’s Black Sea grain exports.

In Chicago, the price of wheat for delivery in September dropped 5.9 percent to $7.59 per bushel, which is equivalent to about 27 kilograms and the lowest close since Russia invaded its neighbor on 24 February.

On Euronext, wheat prices for delivery in September fell 6.4 percent to $325.75 per ton.

Friday’s agreement between Kyiv and Moscow — through United Nations (UN) and Turkish mediation — establishes safe corridors along which Ukrainian ships can come in and out of three designated Black Sea ports in and around Odessa.

Russia and Ukraine together produce about 30 percent of the world’s wheat exports.

Up to 25 million tons of wheat and other grain have been blocked in Ukrainian ports by Russian warships and landmines Kyiv has laid to avert a feared amphibious assault.

Despite Friday’s retreat in wheat prices, analysts expressed skepticism about the accord’s ability to sidestep the realities of the grinding Russia-Ukraine conflict amid doubts over Moscow’s willingness to implement the deal.

“I’m still skeptical and I don’t think I’m alone in that in questioning that it will actually move much grain,” Michael Zuzolo, president of Global Commodity Analytics & Consulting, said.

But Zuzolo said wheat prices may not have much further to fall, given that drought conditions are hitting output in some other parts of Europe.

UN, Turkey guarantors

The first major deal between the warring parties since the February invasion of Ukraine should help ease the “acute hunger” that the UN says faces an additional 47 million people because of the war.

The hostility between Moscow and Kyiv spilled over into the signing ceremony — delayed briefly by disputes about the display of flags around the table and Ukraine’s refusal to put its name on the same document as the Russians.

The two sides eventually inked separate but identical agreements in the presence of UN Secretary General Antonio Guterres and Turkish President Recep Tayyip Erdogan at Istanbul’s lavish Dolmabahce Palace.

Ukrainian ships can come in and out of three designated Black Sea ports.

“Today, there is a beacon on the Black Sea — a beacon of hope, a beacon of possibility, a beacon of relief,” Guterres said moments before the signing.

Erdogan — a key player in the negotiations who has good relations with both Moscow and Kyiv — said the deal would “hopefully revive the path to peace.”

But Ukraine entered the ceremony by bluntly warning that it would conduct “an immediate military response” should Russia violate the agreement and attack its ships or stage an incursion around its ports.

Ukrainian President Volodymyr Zelensky later said the responsibility for enforcing the deal would fall to the UN, which along with Turkey is a co-guarantor of the agreement.