Grain agreement with Russia
Trader doubts ships are calling at Ukraine
07/23/2022, 8:19 am
The agreement between Russia and Ukraine on grain exports that has been awaited for weeks has finally arrived. But what will she bring? Experts from the agricultural trader Baywa assume that the situation will remain difficult.
According to Munich-based Baywa, the resumption of grain exports from Ukraine via the Black Sea will remain difficult even after an agreement with Russia. The experts at Germany’s largest agricultural trader are not expecting wheat prices to fall in the long term anyway. “It remains to be seen to what extent and, above all, how quickly a possible agreement will improve the global supply situation,” the company said on request. Baywa also doubts that shipping companies will let their merchant ships sail again if there is an agreement.
Mediated by UN Secretary-General António Guterres and Turkish President Recep Tayyip Erdogan, Ukraine and Russia have reached an agreement to export millions of tons of grain from the war-torn country. The Black Sea was one of the most important wheat trade routes in the world until the Russian attack on Ukraine, as both countries were major grain exporters in peacetime. Ukraine accused Russia of blocking its ports. Russia denied that.
Appropriate preparations are needed before the first ships can sail again, Baywa said. “For example, the regions around the loading ports must be demined and a ceasefire agreed, and the ships, including crew and loading, need appropriate insurance protection,” said a spokeswoman. “It can also be assumed that, despite the agreement, shipping companies will not call at Ukrainian seaports in order to protect their employees.”
Wheat price level ‘fundamentally justified’
The wheat price is currently about as high as it was before the war – “which suggests that the level is primarily based on fundamentals,” says Baywa.
The war did not have a major impact on the wheat supply in Western Europe, as the EU itself exported grain on a large scale. A significant part of exports from Russia and Ukraine across the Black Sea went to Africa and the Middle East. Famines are looming in Somalia, Ethiopia and Kenya, according to warnings from aid organizations, as East Africa suffers from drought at the same time.