Extension of grain deal with Ukraine still unresolved a day before expiry Ship’s crew

By Megan Durisin, Aine Quinn and Selcan Hacaoglu (Bloomberg) —

The extension of the deal, which boosted Ukraine’s grain exports, is still shrouded in uncertainty as negotiations resume the day before the end of the existing term.

The deal – brokered by Turkey and the United Nations in July – was crucial in bolstering global grain supplies after Russia’s invasion of Ukraine sent shockwaves through agricultural markets. Flows will continue for now despite the upcoming deadline and fresh crop vessels will continue to be deployed clean your head And out of of Ukrainian ports. New deals are being agreed, a shipping agent said, and Egypt also bought 120,000 tons of Ukrainian wheat in a tender on Thursday.

The current term of the deal ends on Saturday. Russia this week proposed extending the initiative by just 60 days – half the length of his previous two terms – but Kyiv has backed down, saying it contradicts the terms of the overarching deal. Talks are ongoing with Russia over the length of an extension, said a Turkish official, who said he expected a deal to be finalized before the deadline.

“Ukraine is one of the most important links in global food security, so we insist that the grain deal is open-ended and automatically extended by 120 days,” Ukrainian Prime Minister Denys Shmyhal said at a cabinet meeting on Friday.

It’s unclear whether ships will continue to enter and exit through the corridor if there is no announcement before the current term ends at midnight on Saturday. As Russia unexpectedly resigned Since the October deal, outbound traffic from Ukraine has continued while no new inbound vessels have been handled. A ship turned back after sailing most of the way through the Black Sea.

Shipping agents of Novik LLC and agency Inzernoexport GmbH in Odessa said they were optimistic the ships would continue sailing.

“There is a risk that it will fail, but everyone is hoping for the best,” said Tariel Khajishvili, director at Novik LLC in Odessa. “I don’t see people panicking at the moment. People are repairing new ships and booking places in our terminal for the next month and a half.” He has 10 ships waiting in a queue around Istanbul.

Even if the deal is extended, farmers and traders still have problems to Nibulon, a major Ukrainian grain trader. The slow pace Vessel inspections through the corridor and disruptions to delivery dates have prompted some customers to withdraw from contracts, it said.

“Ukrainian exporters will be forced to look for a new buyer for their goods at a lower price, cargo in hand, with chartered ships in line, even if the deal is extended by 60 days or some other term,” he said Volodymyr Slavinsky, Nibulon’s deputy director of commerce. “This is already causing direct losses for exporters, traders, farm producers and farmers.”

The terms of the Black Sea Grain Initiative suggest that this can happen automatically expanded for 120 days unless either party attempts to change or exit the deal. A spokesman for the UN Secretary-General on Thursday refused to say whether the agency has received any official communications on this and whether talks are ongoing.

A 60-day extension would mean the deal expires shortly before a Turkish general election. Moscow’s push for a shorter deadline may be aimed in part at waiting for the results, said Andrei Kortunov, academic director of Russia’s International Affairs Council.

Demand for fresh grain shipments at ports has dried up this month as traders are uninterested in buying more supply before the corridor’s duration is confirmed, said Andrey Novoselov, an analyst at consultancy Barva Invest. This means that farmers who need additional cash flow before spring field work will try to sell additional quantities across the western border, weakening prices there.

These rail, road and river routes have accounted for a significant portion of Ukraine’s grain sales in recent months, meaning exports will not stall even if the corridor is disrupted. Still, the decision comes at a crucial part of the growing season, as the weather warms up, and will have an impact on which summer crops farmers ultimately choose to plant across Ukraine, said Alex Lissitsa, chief executive officer of agribusiness IMC.

Futures for wheat and corn — the two main commodities shipped under the deal — both headed for their first weekly gains in a month. Paris wheat futures are also up more than 1% this week.

–With support from Olesia Safronova, Firat Kozok, Daryna Krasnolutska and Keira Wright.

© 2023 Bloomberg LP

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