Ukraine and Russia reach deal to resume grain exports from the Black Sea

Grain exports
Farmers harvest barley in a field in the Ukrainian Kharkiv region on July 18, 2022.
Sergey Bobok—AFP/Getty Images

Russia and Ukraine reached a deal aimed at releasing millions of tons of grain from Ukraine’s Black Sea ports that, if implemented, would mark a major step toward shoring up global food supplies.

Government officials from Kyiv and Moscow signed agreements with Turkey and the United Nations at a meeting in Istanbul. Grain ship traffic should begin in the coming days, said Turkish President Recep Tayyip Erdogan. The accord involves shipments from three Ukrainian ports: Odesa, Chornomorsk and Pivdennyi, said United Nations Secretary-General Antonio Guterres. 

“This is an unprecedented agreement between two parties engaged in bloody conflict,” Guterres said at the ceremony.

The deal could help revive agricultural trade from one of the world’s biggest wheat, corn and vegetable-oil exporters. If realized, that would help ease strained global grain supplies and take some pressure off food prices that surged to record levels in recent months.

However, many logistical hurdles remain and it’s uncertain how quickly exports will progress with Russia’s war still raging. The grain corridor deal is valid for three months but can be extended if needed, Guterres said in an interview with Turkey’s NTV news. 

Ukraine faces challenges from finding enough ships to carry the backlogged grain, to getting insurance to cover operations. The plan’s success also hinges on Moscow’s security assurances and President Vladimir Putin living up to his side of the bargain, at a time when the Kremlin is moving to annex occupied lands and continues to advance in Ukraine’s east. 

The three Ukrainian ports involved accounted for just over half of its seaborne grain exports in the 2020-21 season, UkrAgroConsult data show.

The supervision of the plan will be coordinated from a joint center in Istanbul, according to Erdogan. Defense Minister Sergei Shoigu signed the deal for Russia and Infrastructure Minister Oleksandr Kubrakov signed for Ukraine in a separate accord.

Officials have been working to reach a deal for month and tensions were evident during the signing—the Ukrainian and Russian representatives didn’t join Erdogan and Guterres at the head table during opening remarks, and signed separate agreements respectively with Turkey and the UN. 

Benchmark wheat futures in Chicago traded 3.5% lower after the signing, paring earlier losses and leaving them little changed on the week. Corn and soybeans rose. 

—With assistance from Volodymyr Verbyany, Beril Akman and Ugur Yilmaz.

Sign up for the Fortune Features email list so you don’t miss our biggest features, exclusive interviews, and investigations.

Read More

Ukraine InvasionCybersecurityEnergyTravel IndustryAutos