International Wheat Prices Surge 7%... Russia Withdraws from Ukraine Grain Export Agreement Impact

Bushel price surges to $8.93
Rising pressure on prices due to food supply shortage

[Image source=Reuters Yonhap News]

[Asia Economy Reporter Lee Ji-eun] Wheat prices surged more than 7% in the futures market after Russia unilaterally declared its withdrawal from the Black Sea grain export agreement with Ukraine. There are concerns that if the Black Sea, which accounts for one-third of the world's wheat production, is blocked, it could deliver a significant shock to the global grain market.

According to Bloomberg on the 30th (local time), wheat prices traded on the Chicago Board of Trade (CBOT) in the United States rose 7.7% from the previous closing price to $8.932 per bushel. Corn increased by 2.8%, and soybean oil rose by 2% compared to the previous closing prices.

Bloomberg explained, "Grain prices surged after Russia declared its withdrawal from the Black Sea grain export agreement," adding, "This agreement has played a crucial role in mitigating the reduced global food supply and controlling global food prices."

Earlier in July, Ukraine and Russia signed an agreement to resume grain exports through the Black Sea, mediated by the United Nations (UN) and T?rkiye. Thanks to the agreement, Ukraine has exported more than 9 million tons of grain so far, and wheat prices, which had approached $13 per bushel immediately after the outbreak of the war, fell to the mid-$7 range in August.

However, at the beginning of this month, tensions surrounding the war escalated as Russia bombed Kyiv, the capital of Ukraine, causing wheat prices to rebound. Furthermore, on the 29th, Russia unilaterally declared its withdrawal from the agreement, which was temporarily maintained until the 19th of next month, intensifying the pressure on wheat price increases.

Bloomberg stated, "Due to losses caused by the grain export agreement, grain prices are likely to rise," and added, "Other countries will try to fill the supply gap, but it will not be completely covered."

Meanwhile, T?rkiye and the European Union (EU) launched comprehensive responses as the negotiations faced the risk of collapse. Josep Borrell, the EU High Representative for Foreign Affairs and Security Policy, discussed measures to extend the agreement in a phone call with Ant?nio Guterres, the UN Secretary-General.

On the 30th, T?rkiye issued a statement saying, "We are resuming negotiations with both countries to restart grain export talks," and requested both sides to avoid provocations that could affect the resumption of the agreement.