Russia Pulls Out Of Ukraine Grain Export Deal Triggering Fears Of Price Increases

Russia has announced that it is pulling out of a UN-brokered deal that ensured the security of Ukrainian grain exports through the Black Sea.

Monday’s development once again raises fears about global food supplies and price increases.

The last ship to sail under the deal, Turkish-flagged TQ Samsun, reportedly left the Ukrainian port of Odesa Sunday morning and is heading out through the Bosphorus Strait, passing Istanbul, along an agreed corridor.

Shipping of grain and other agricultural products from Odesa, which had been halted since the Russian invasion of Ukraine in February, had resumed under a landmark deal signed by Ukraine, Russia and Turkey in July last year.

In November, Russia had threatened to pull out of the Black Sea Grain Initiative, leading to concerns about global food supplies.

After talks between the UN, Russia and Ukraine, hosted by Turkey, all parties had agreed to extend the deal for 120 days.

The deal was extended twice again for two periods of 60 days each.

On Monday, with just hours left before the deal expired, Kremlin spokesperson Dmitry Peskov said at a news conference that it “has been terminated.”

Russia is not ready to extend the agreement, he told reporters.

He cited the obstacles Russia faced in shipping its food and fertilizer to global markets as the reason.

“As soon as the Russian part is completed, the Russian side will return to the implementation of this deal immediately,” Peskov said.

A Russian blockade of Black Sea ports that prevented the supply of grains to the global market and reduced production prospects in Ukraine because of the war had led to steep increase in wheat and other grain prices.

Ukraine and Russia account for nearly a third of global wheat exports, with the two countries supplying more than 45 million tons annually, according to the UN Food and Agriculture Organization (FAO).

The Grain Initiative allows for significant volumes of exports from three Black Sea ports.

One year into the agreement, more than 32 million tons of food commodities have been exported from Odesa, Chernomorsk, and Yuzhny to 45 countries across three continents.

The Initiative helped unblock vital food commodities shortages and reverse spiking global food prices.

The FAO Food Price Index recorded a steady monthly decline over the past year, dropping more than 23 percent from its peak in March 2022.

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