ROME, July 10. /TASS/. Ukrainian grain exports, which are provided under the Black Sea Grain Initiative (BSGI), contribute to the stability of world markets, so an extension of the deal is highly desirable. Monika Tothova, economist at the UN Food and Agriculture Organization (FAO), told TASS on Monday.
She noted that price volatility stemming from market reactions to political events and statements negatively affects farms and importing countries.
The expert noted that, according to the latest Food Price Index, published monthly by the FAO, cereal prices continue to decline. Tothova also explained that prices peaked in February 2022 when the exports from the Ukrainian Black Sea Ports suddenly came to a halt, and other export supply channels had not yet been established.
"At the same time, there was a concern that exports from the Russian Federation might be affected," she said. However, the current conditions are somewhat different.
"While spot and futures prices (such as for wheat and maize) are generally decreasing, they do change according to the news - such as announcements by the Russian Federation in late June 2023 hinting that it "saw no reason to extend the Black Sea grain deal" which made the news. The markets react to similar announcements by putting upward pressure on prices - which, after an increase, tend to decline owing to market dynamics resulting from overall comfortable supplies - yet this price volatility is not beneficial," the expert said.
In particular, "it hurts farmers who might be contemplating selling their products or might be facing planting decisions, and it also hurts importing countries," Tothova added.
"If no agreement is found on maintaining the BSGI and it is terminated, international reference prices are likely to increase. The actual increase will depend on the overall global supply (which at the moment seems rather satisfactory), and trade policies applicable at the moment facilitating exports of Ukrainian agricultural commodities," she noted.
The expert also pointed out that the pace of shipments under the Black Sea Grain Initiative has recently decreased due to a reduction in the number of inspection crews.
"The Black Sea exports from Ukrainian ports still contribute to the stability of world markets, and also provide income to Ukrainian farmers allowing them to continue production.
"The exports from Ukrainian Black Sea ports improve supplies on the world markets, and lower prices for everyone," the FAO expert concluded.
About the grain deal
On July 22, 2022, a package of documents on the supply of food and fertilizers to the international market was signed in Istanbul. Initially, the agreements were concluded for 120 days, but in November of last year they were extended for another 120-day period. On March 18, 2023, Russia announced it had agreed to a 60-day extension of the deal, while warning that this should provide sufficient time to evaluate the implementation of the memorandum signed with the UN.
The Russian Foreign Ministry stressed that the part of the agreement covering obligations to Moscow is not being fulfilled.
In particular, Russia has insisted on restoring the access of its ships to foreign ports, normalizing the situation with the insurance of dry cargo ships, and reconnecting the Russian Agricultural Bank to the SWIFT interbank payment system.
On June 30, Russian Foreign Minister Sergey Lavrov said that at the moment he sees no arguments in favor of extending the agreements.