Ukraine doubts future of Black Sea grain deal, Russia resumes ships inspection

A week after Russia raised doubts about the future of the Black Sea grains deal, Ukraine also said on April 17 that the UN-brokered initiative was at danger of being shutdown alleging that Russia has been blocking inspection of ships.

Ukrainian Black Sea ports were blockaded after Russia’s invasion last year, but access to three of them was cleared last July under a deal between Moscow and Kyiv that was brokered by the United Nations and Turkey.

“#BlackSeaGrainInitiative [Black Sea Grain Initiative] under threat of shutdown because of Russian Federation. It is unacceptable and contradicts BSGI’s conditions. Ukraine is against interference with our ports. Rely on Turkey & UN reaction,” Oleksander Kubrakov, Ukraine’s Vice Prime Minister for Restoration said, on April 17, in a tweet.

The two countries signed a deal July 22, 2022, to recommence Ukrainian wheat shipments from Chernomorsk, Odessa and Yuzhny ports after flows were halted following Russia’s invasion of Ukraine Feb. 24, 2022.

Ukraine, the UN and Turkey agreed March 18 to extend the deal for another 120 days. However, Russia said the deal may not be extended beyond May 18.

“For the second time in nine months of operation of the Grain Initiative, an inspection plan (for participating vessels) has not been drawn up, and not a single vessel has been inspected. This threatens the functioning of the Grain Initiative,” Ukraine’s restoration ministry said in a release.

The Ukrainian restoration ministry said, on April 17, in the last three days, Russian inspectors had refused to register three vessels without any explanation.

Russia, on the other hand, accused Ukraine of violating rules and procedures of the deal.

“Ukrainians themselves violated the rules and procedures. We insisted that they be observed as they were written down. But when the Ukrainians realized that you can’t go through in a hurry, now they again began (to observe them),” Russian news agency RIA Novosti quoted Petr Ilyichev, director of the department of international organizations of the Russian foreign ministry.
According to RIA Novosti, the foreign ministry official said that inspections were conducted for only one day and they have resumed on April 18.

Earlier the Russian foreign ministry said that unless five “systemic” issues are resolved, the grain deal may not be extended beyond May 18.

On April 13, Russia’s foreign ministry said, it wants to reconnect its Rosselkhozbank (Russian Agricultural Bank) to the SWIFT international payment gateway, resume supplies of agricultural machinery, spare parts and maintenance service to the country.

Russia also wants the lifting of restrictions on insurance and reinsurance for ships and cargoes, guarantees of access to its Black Sea ports, restoring the Tolyatti-Odessa ammonia pipeline and the unblocking foreign assets and accounts of Russian companies related to the production and transportation of food and fertilizers.

Any stoppage of trade, under the agreement, may tighten grain supplies globally in marketing year 2022-23 (July-June).

The US Department of Agriculture, in its latest World Agricultural Supply and Demand Estimates report April 11, has pegged Russia’s wheat exports for MY 2022-23 at 45 million mt, compared with 33 million mt in previous year.

S&P Global Commodity Insights analysts have forecast Russian wheat exports in MY 2022-23 at 44 million mt.

For Ukraine, the USDA has estimated wheat exports at 14.5 million mt in MY 2022-23, against 18.84 million mt in the previous season. S&P Global, meanwhile, forecasts Ukraine’s wheat exports for MY 2022-23 at 15 million mt.

The USDA has estimated Ukraine’s corn exports at 25.5 million mt for MY 2022-23, against 26.98 million mt seen for MY 2021-22.

Platts, part of S&P Global, assessed Russian 12.5% FOB wheat prices at $275/mt and Ukrainian 11.5% FOB wheat at $260/mt on April 17, both unchanged on day. Platts assessed Ukrainian corn FOB at $224/mt, also unchanged.
Source: Platts