It is uncertain whether Russia would continue to participate in a United Nations-backed effort that has allowed grain exports from Ukraine’s Black Sea ports.

Russia said on Monday that extending the Black Sea grain pact would be “inappropriate” until sanctions placed on Moscow following its invasion of Ukraine on February 24 last year, which have harmed its agricultural exports, are lifted.

The agreement to allow grain exports from Ukraine’s southern Black Sea ports was renewed for 120 days on November 17.

According to sources acquainted with the situation who spoke on the condition of anonymity, the agreement must be renewed by approximately March 20 at the latest in order for exports to continue.

It was reached in July of last year and was intended to alleviate global food shortages by enabling shipments to restart from three ports in Ukraine, a key producer of grains and oilseeds.

Over 21.1 million tonnes of agricultural products, including 10 million tonnes of corn, have been moved under the agreement to develop a safe shipping channel.

Wheat shipments have hit 6 million tonnes, accounting for 28% of overall shipments. Rapeseed, sunflower oil, sunflower meal, and barley are among the other goods supplied.

In exchange for continuing to support the treaty, Russia wants sanctions on agricultural exports lifted.

Sanctions have not specifically targeted agricultural exports, but Moscow claims that restrictions on its payments, logistics, and insurance industries are impeding the sale of grains and fertilisers.

Moscow is reported to want the West to lift limitations on the national agricultural lender Rosselkhozbank, which would help Russian exports.

Ukraine has not made any revisions public, but in the run-up to the November agreement, it unsuccessfully pushed to expand the contract to cover more ports.

The three ports involved in the transaction — Odesa, Chornomorsk, and Pivdennyi – have a combined capacity of three million tonnes per month.

Ukraine wanted to include the southern Mykolaiv region’s ports, which supplied 35% of Ukrainian grain exports prior to Russia’s invasion.

According to 2021 shipment figures, Mykolaiv was Ukraine’s second-largest grain terminal, therefore its inclusion would enable for a substantially bigger number of grains and oilseeds to be shipped.

Ukraine has separately requested a one-year extension of the agreement as well as a streamlined inspection process.

Decreased supplies from Ukraine, a key exporter, have contributed to the worldwide food price problem.

Additional reasons include the COVID-19 pandemic and climate shocks, including droughts in both Argentina and the United States.

The corridor has resulted in a partial recovery in Ukrainian shipments, but they remain well below pre-invasion levels and will not recover fully for the foreseeable future.

Transporting commodities to and from ports there is difficult and expensive, and Ukrainian farmers have restricted sowings of crops like as wheat after selling last year’s crops at a loss in many cases due to poor local prices.

Wheat prices on the Chicago Board of Trade increased dramatically following Russia’s invasion of Ukraine on February 24, 2022.

They are already back to pre-conflict levels, thanks to Ukraine’s capacity to export millions of tonnes of wheat through the corridor.

Additional considerations include last year’s record crop in key exporter Russia, a bleak global economic outlook, and a strong dollar.

Despite the decrease in Chicago futures, prices for wheat-based food staples such as bread and noodles remain significantly above pre-invasion levels in many developing nations, as weak local currencies and increasing energy prices have raised costs such as transportation and packaging.

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