Russia is once again raising doubts about the renewal of the Black Sea Grain Initiative and the long-term viability of the wartime deal that is allowing Ukraine to help supply the world with grain and keep food prices from skyrocketing in some of the poorest countries.
Moscow announced on Monday that it is willing to grant just a 60-day extension to the Black Sea Grain Initiative beyond its March 18 renewal deadline, taking the United Nations by surprise. That’s just half of the 120-day renewal period agreed upon by the UN, Ukraine, Russia and Turkey when they signed the deal in July.
The initiative, which is allowing millions of tons of Ukrainian wheat and corn to make it to the global market, was last up for renewal in November, and Moscow threatened that extension as well by briefly halting its participation and making shippers question the safety of their vessels in the Black Sea.
The Russian announcement of its desire for just a 60-day renewal came after talks in Geneva Monday led by UN Under Secretary General for Humanitarian Affairs Martin Griffiths, Rebeca Grynspan, the secretary-general for the U.N. Conference on Trade and Development and Russian Deputy Foreign Minister Sergei Vershinin.
UN spokesman Stephane Dujarric did not comment Tuesday on whether an alteration of the Initiative is being considered by the UN, Ukraine or Turkey.
“Within the context of the Black Sea Grain Initiative, the agreement sees a renewal for 120 days, but in the present circumstances, the secretary general and his team are … in close contact with all of the parties on doing everything possible to ensure the continuity of the Initiative,” Dujarric said in a press conference that grew confrontational as reporters demanded more information.
“I don’t want to be dragged into details of where we are right now,” Dujarric said.
Joe Glauber, IFPRIWhile the fact that Russia appears ready to agree to the renewal of the initiative, Moscow’s insistence that it only be kept alive for another 60 days adds new uncertainty to the market and will slow down trade, said Joe Glauber, a senior research fellow at the International Food Policy Research Institute and former USDA chief economist.
“The problem in the past has been as this (renewal date) approaches, shipping slows down because people don’t want to get caught in an uncertain situation," Glauber told Agri-Pulse.
Seven vessels were scheduled to depart from Odesa ports on Tuesday, carrying corn, sunflower meal and sunflower oil to China, Spain and the Netherlands, according to the UN joint Coordination Center in Istanbul.
Vessels must enter the Black Sea through the Bosporus Straight, dock at one of three Odesa ports, then leave again through the Bosporus, where there is an inspection carried out by the JCC.
“There is a lot of uncertainty and we have seen slower traffic (in the Black Sea) this month,” said Glauber. “It’s a shame if that’s the case, and they’re going to 60 days instead of 120 days.”
At the heart of Russia’s demand to put a new limit on the initiative is Moscow’s complaint that Russian exports of fertilizer are still restricted. The UN, Ukraine, Russia and Turkey signed a separate deal alongside the initiative that was supposed to clear the way for Russian fertilizer exports, but that trade has been hampered and Moscow is growing impatient.
The European Union, UK and the U.S. have been telling global traders for months that there are no sanctions on Russian fertilizer, but fears have persisted about dealing with some Russian banks to finance the trade.
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“The EU has been clear,” Glauber said. “They’ve been trying to give assurances to member states that there won’t be a problem if they want to ship Russian fertilizer, but there’s a risk there for any importers and that’s been part of the problem.”
Vershinin said the West would have 60 days after the initiative was renewed to improve Russia’s ability to export fertilizer.
“The detailed and frank conversation once again confirmed that if the commercial export of Ukrainian products is carried out at a steady pace, bringing considerable profit to Kiev, then barriers still remain in the way of Russian agricultural exporters,” Vershinin said in a statement. “The sanctions exemptions for food and fertilizer announced by Washington, Brussels and London do not actually work.”
But it is at least partially working, says Georgy Eliseev, a market analyst for S&P Global Commodity Insights. About 60,000 tons of Russian ammonia was recently shipped out of Estonia, he said.
Russia has had the hardest time exporting ammonia. The country does not have terminals to load ammonia onto ships, so it relies on sending it via pipeline to the Yuzhny port facility in Ukraine or delivering it to terminals in Baltic countries like Estonia and Latvia.
Glauber said it's difficult to know how much Russia can export, because the country does not report data, although import numbers gathered from around the world show Russian ammonia shipments dropped by more than 70% in 2022.
Key for Russia would be getting the ammonia pipeline from the UralChem Togliatti Azot facility in Samara to the Ukrainian port of Yuzhny operating again, said Glauber.
Eliseev said that’s actually closer to being possible since the pipeline shut down at the beginning of the Russian invasion. The war is still raging, but there is pressure in the pipeline and Russia could begin pumping ammonia.
Meanwhile, Dujarric stressed that the UN is doing what it can.
“Meaningful progress has been made, but it is true that some obstacles remain, notably with regard to payment systems,” he said. “Our efforts to overcome those obstacles will continue unabated.”
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