Economic Insider

Wheat Prices Surge Following Russia’s Cancellation of Grain Export Agreement

The global commodities market saw huge wheat and corn prices rise after Russia’s withdrawal from the grain export deal.

The agreement allowed grain exports from Ukraine to other countries to transport via the Black Sea. It continued to function despite the ongoing discord between Russia and Ukraine. However, Russia withdrew from the agreement unprecedentedly, distorting Ukraine’s essential grain and wheat exports.

According to the Chicago Board of Trade, wheat prices could soar by 5.5% to $8.74 per bushel. Meanwhile, corn per bushel could climb by 2.3% to $6.96. Meanwhile, Malaysia may feel the effects of the new arrangement, with palm oil prices possibly rising.

“Taking into account the act of terrorism committed by the Kyiv regime with the participation of British experts on October 29 this year against the ships of the Black Sea Fleet and civil vessels involved in the security of the ‘grain corridor,’ the Russian side suspends its participation in the implementation of the agreements on the export of agricultural products from the Ukrainian ports,” said the Russian defense ministry.

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The international community takes steps

Stephane Dujarric, the UN spokesman, said, “We’ve seen the reports from the Russian Federation regarding the suspension of their participation in the Black Sea Grain Initiative following an attack on the Russian Black Sea Fleet. We are in touch with the Russian authorities on this matter.”

Meanwhile, the World Food Programme warned that the crisis would result in widespread hunger. According to the organization, if Russia persists in using food as a weapon in its invasion, many people will suffer. Senior Western officials quickly expressed their displeasure with Russia’s handling of the Ukraine conflict.

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Affecting the network of global grain supply

According to agricultural data firm Gro Intelligence, Russia and Ukraine account for more than a third of global wheat exports. Meanwhile, the countries are top worldwide for maize, rapeseed oil, sunflower oil, and barley exports. Taking these two countries out of the formula means dispossessing the global market of these products, which will influence the supply chain.

Russia canceled the agreement following a purported drone attack by Ukraine on its Black Sea Fleet. However, Ukraine dismissed the accusations, claiming that Russia sabotaged its own forces to find a reason to terminate the agreement. And put more pressure on nearby Ukrainian forces.

The International Rescue Committee added that Russia’s drawdown from the grain deal would be horrendous for impoverished countries. The situation exacerbates the already acute hunger in these countries.

“We underline the urgency of doing so to contribute to food security across the world and to cushion the suffering that this global cost-of-living crisis is inflicting on billions of people,” said UN Secretary-General Antonio Guterres.