Russia’s G20 bargaining chip
ALL eyes will be on how Russian president, Vladimir Putin, will use the Black Sea grain corridor as a bargaining chip at the upcoming G20 meeting in Indonesia on November 16.
Last week started with Russia pulling out of the UN agreement to allow boats safe passage to ship cereals through the Black Sea. Then, after assurances from Ukraine that they would not use the corridor for military purposes, Russia re-joined the agreement.
The safe passage deal is set to expire around November 19/20, with experts predicting that Russia will now use the grain corridor as a ‘bargaining chip’ at the upcoming G20 meeting fo some of the world’s richest nations, in Indonesia.
It is understood that Russia is frustrated that a significant volume of the grain exiting through the Black Sea is coming to the EU amongst other destinations such as North Africa and the Middle East.
The volatile geopolitical situation in Europe is filtering down to the grain market where grain and oilseed prices jumped up on the news that Russia had withdrawn from the UN
Ukrainian export deal on Saturday.
UK feed wheat futures followed global movements on the back of this news, with the May, 2023, contract up £9.45/t last Monday (Nov 1), to close at £289.45/t. However, by the middle of the week after Russia re-joined the agreement UK feed wheat futures for May, 2023, were trading at £279/t, down £10.25/t and November 2023 prices fell £10.05/t to trade at £260/t and stayed around there since.
According to the AHDB, since the establishment of the deal in July, 43% of total cargo shipped from Ukraine had been maize and 29% wheat. As such, a large proportion of wheat is still tied up in the
Black Sea region, meaning that fact is fuelling volatility for that crop.
On Sunday and Monday, of last week, a total of 12 ships were recorded by the UN to have departed from Ukrainian ports (Chornomorsk, Yuzhny/ Pivdennyi and Odessa) of primarily maize and wheat to a variety of destinations EU to North Africa. Though this also included 46,000 tonnes of rapeseed leaving Chornomorsk heading to the UK.
A further two ships left Ukrainian ports that Tuesday carrying wheat and sunflower meal to North African countries, according to UN data.
These shipments were made despite reportedly no new insurance cover from insurers. Lloyd’s of London insurer, Ascot, followed by Lloyd’s underwriters, were thought to have suspended cover for new shipments using the grain corridor until more clarification on the situation.
Hull war cover, from war risk insurers, had reportedly risen to 1.5% of the cargo’s value, from 1% on Monday. Cargoes are reportedly unlikely to get cover.
Reportedly, 65 cargo ships remain stuck in Ukraine across various ports on the Black Sea, including ports not in the UN deal, according to analysis from the International Chamber of Shipping.