Rabobank, Media Release, 18 July 2023

Global grain prices will continue to be volatile until the market is able to decipher the end impact of Russia withdrawing from the Black Sea Grain Initiative, according to Rabobank senior grains analyst Dennis Voznesenski. The deal – which has allowed wartime Ukraine grain exports across the Black Sea – expired overnight Australia time after Russia confirmed it would not agree to its renewal.

Mr Voznesenski said global grains prices had been on a rollercoaster since the agreement expired as the market “attempts to decodify the impact on international trade flows”.

“The main question will be whether Ukraine continues to export through the Black Sea without the safety of the grain corridor.

“Prices will continue to be volatile until the market is able to decipher the end impact,” he said.

Since the start of the war, Ukraine has been building up export avenues away from its Black Sea grain ports, Mr Voznesenski said. “However, they are not yet sufficient enough to entirely compensate for the loss of the Black Sea Grain Initiative,” he said.

“More than 40 per cent of Ukraine’s grains and oilseeds exports moved through the grain corridor in recent months, with the remainder moving over road and rail into eastern Europe and through the Danube river system. The Danube river system export capacity has been increasing substantially since the war started, but more expansion will take time.”

In addition, the impact of the expiry of the Black Sea Grain Initiative on Russian grain exports will also need to be seen, Mr Voznesenki said. “Any exemptions that Russia was given by the west in return to signing up to the grain corridor will likely become void, possibly slowing its export abilities,” he said.