GENEVA, May 16 (Reuters) – The Black Sea Grains Agreement, which allows sea exports from Ukraine, is most likely to be renewed, according to market sources, but even a Russian veto would not prevent Ukrainian supplies from reaching world markets – albeit at a higher cost.
Turkey, Ukraine, Russia and the United Nations are holding talks on ways to extend a deal negotiated in July that will allow Ukrainian grain to be safely exported across the Black Sea and expires on May 18.
Moscow has threatened to pull out of the deal over obstacles to its grain and fertilizer exports. The Kremlin said on Tuesday that there were still questions about Russia’s part in the deal and that a decision on an extension had to be made.
Out of about 20 top Ukrainian and international traders and analysts polled by Reuters at the GrainCom conference in Geneva, a large majority said they expect the deal to be extended, albeit potentially with some delay.
However, “it doesn’t matter if it’s renewed,” Dan Basse, president of Chicago-based consulting firm AgResource, said on the sidelines of the gathering.
“With a smaller crop this year, anything can go west through Eastern Europe. The problem is that it will cost 15 to 20% more,” he added.
Almost all delegates interviewed at the conference said that the much smaller harvest expected this year has eased the pressure to export via Black Sea ports and that alternative routes such as rail, truck and exports via the Danube might offset this.
“Do we need the corridor? I would say yes… But if we don’t have it, will we find a solution to export everything through the EU export corridor? I would say yes too,” said Stefan Florescu, global head of wheat trading at CHS, the largest US agricultural cooperative, at the conference.
However, Nikolay Gorbachev, head of the Grain Union of Ukraine, warned that without the corridor, export logistics prices would skyrocket and farmers’ profit margins would be so severely reduced that they would stop producing large quantities of wheat and corn.
Under the agreement to create a safe shipping channel, Ukraine was able to export about 30.25 million tons of agricultural products, of which 50% was corn and 28% was wheat. Other shipped goods are rapeseed, sunflower oil, sunflower meal and barley.
(Reporting by Sybille de La Hamaide; Editing by Jan Harvey)
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