Russia’s threat to pull out of the Black Sea Grain Initiative continues to imperil global supplies of wheat and corn, but China would be one of the biggest losers if that happens.
China hasn’t condemned the Russian invasion of Ukraine, and the China-Russia relationship only seemed to tighten after Chinese President Xi Jinping’s trip to Moscow in March, but China is showing signs that it wants to see Ukrainian grain continue to flow out of Odesa.
The Black Sea Grain Initiative needs to be renewed, Geng Shuang, China’s deputy permanent representative to the United Nations, said during a recent meeting of the UN Security Council, according to a UN translation.
The initiative – a UN-negotiated deal between Ukraine, Russia and Turkey that has allowed Ukraine to export more than 32 million metric tons of grain and other farm goods through three Odesa ports despite the ongoing war – will expire July 17 if Moscow follows through on its threat.
Spain, Turkey, Egypt and the Netherlands are all recipients of Ukrainian grain that that are shipped from the Odesa ports, but China is the largest recipient, and the country stands to lose the most if Moscow shuts down the initiative.
Since the initiative was put in place a year ago, China has imported about 5.7 million metric tons of corn, 1.5 million tons of sunflower meal, 370,000 tons of soybean oil and 340,000 tons of barley, according to UN data.
According to a recent analysis published by USDA’s Foreign Agricultural Service, about 25% of all the grain and oilseeds that were allowed to ship because of the Black Sea Grain Initiative have gone to China, “making it the single largest recipient of food and feed commodities."
Most recently, two ships carrying 63,405 tons of corn and 63,423 tons of sunflower meal from the Ukrainian Port of Chornomorsk to China passed through inspection in the Bosporus Strait on Friday, according to the UN’s Joint Coordination Center.
Collin Watters, Illinois CornThose ships, which were bound for China, are two of only about 13 operating in the Black Sea because inspection and ship approval activities have slowed substantially, UN spokesman Farhan Haq said Friday. Ukrainian officials have blamed Russian inspectors for slowing down Black Sea operations. An ample supply of inexpensive corn is critical for China, said Collin Watters, director of exports and logistics for the Illinois Corn Marketing Board and the Illinois Corn Growers Association.
“They have a massive hog herd that needs to eat,” Watters told Agri-Pulse. “At this point they’re experiencing drought in some corn growing regions.”
If China can no longer get corn from Ukraine, he said, the country will have to rely more heavily on getting supplies from the U.S. or Brazil.
UN officials say the organization is doing all it can to ensure the initiative is renewed, but that job likely got more difficult last month when an ammonia pipeline that runs from UralChem’s Togliatti Azot facility in Russia to the Ukrainian port of Yuzhny was damaged in the war.
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Russia has been demanding for months that Ukraine reopen the pipeline through which Russia exported its ammonia before the war. Russia insists that the reopening of the pipeline is covered under a second deal that the UN, Ukraine, Turkey and Russia signed at the same time as the Black Sea Grain Initiative.
Haq said efforts to save the initiative are ongoing.
“We're continuing with our talks,” he said. “We're doing the best we can to make advances in certain key sectors. And we will see what can be done, but we're doing our very best to ensure the continuing success of these initiatives.”
Russia has twice previously threatened to pull out of the Black Sea Grain Initiative, said Joe Glauber, a senior research fellow at the International Food Policy Research Institute and former USDA chief economist, but he stressed that “this time looks more serious.”
The fact that the Russian inspectors in the Joint Coordination Center have been blocking ships from loading grain at Yuzhny – one of the three Odesa ports reopened under the initiative – for more than a month is a sign that the threat from Moscow this time is more grave, Glauber tells Agri-Pulse. Furthermore, the JCC hasn’t approved any new ships to enter through the Bosporus Strait since June 26.
The last time a ship picked up grain from Yuzhny was on May 11 when a vessel loaded about 30,000 tons of corn for delivery to Egypt, according to UN data.
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