The Kremlin on Thursday confirmed that it had renewed the Black Sea grain deal, saying an agreement had been reached after what it called "a qualified result" for Russia in negotiations over easing restrictions on Russian agricultural exports.
In a call with reporters, Kremlin spokesperson Dmitry Peskov said that different scenarios were being worked out regarding easing restrictions on Russia’s state agricultural bank, a key demand of Moscow in the renewal talks.
The deal has been extended for another two months thanks to Türkiye’s engagement, President Recep Tayyip Erdoğan announced earlier Wednesday.
The announcement came after the last ship departed from a Ukrainian port under the landmark wartime pact due to expire Thursday. Russia threatened to withdraw from the initiative due to obstacles hindering its grain and fertilizer shipments.
The breakthrough accord was brokered by the U.N. and Türkiye with the warring sides last summer to help tackle a global food crisis aggravated by Moscow’s invasion of Ukraine, one of the world’s leading grain exporters. The pact came with a separate agreement to ease shipments of Russian food and fertilizer that Moscow insists hasn’t been applied.
"Thanks to the efforts of our country and the contributions of our Russian and Ukrainian friends, it was decided to extend the agreement for another two months," Erdoğan said in televised remarks from the capital Ankara.
Meanwhile, Russian Foreign Minister Sergey Lavrov said Thursday that they supported President Erdoğan’s idea to extend the deal, "but the next two months will be decisive for the deal."
Speaking at a news conference with his Ugandan counterpart, Lavrov said the deal aimed to bolster the food security of the world’s poorest people.
Ukraine earlier welcomed the extension but said it must work effectively.
With a similar extension in the balance in March, Russia unilaterally decided to renew the deal for just 60 days instead of the 120 days outlined in the agreement.
Meanwhile, the U.S., U.K. and the U.N. also welcomed President Erdoğan’s extension announcement.
"We welcome President Erdoğan’s announcement of extending the Black Sea grain Initiative. As we’ve said before, we strongly support the U.N.’s and Türkiye’s efforts on the deal, which keeps global food and grain prices low," State Department spokesperson Vedant Patel told reporters Wednesday.
U.N. Secretary-General Antonio Guterres thanked Türkiye for contributing to extending the Black Sea Grain Initiative to ensure global food security.
"We have some positive and significant developments... The confirmation by the Russian Federation to continue its participation in the Black Sea Initiative for another 60 days. I welcome this decision," Guterres said at a news conference.
The British foreign secretary on Thursday welcomed the extension of the Black Sea Grain Deal, calling on Russia to commit to the deal’s "full implementation."
"The continuation of the BSGI (Black Sea Grain Deal) is a positive step, but Russia’s false deadline destabilized the deal and slowed food reaching those most in need," James Cleverly said on Twitter.
He thanked Türkiye and the U.N. for their efforts on the deal extension.
"Russia must stop using food as a weapon and commit to the deal’s full implementation," he added.
Meanwhile, regarding the running of the deal, Foreign Minister Mevlüt Çavuşoğlu on Thursday morning said that six of "our ships could not pass through the Kerch Strait because of the conflicts and mines there."
He said he called his Russian counterpart, Lavrov, Wednesday, and "the Russian side did its part for the exit of our ships stranded in the ports of Mikolayiv and Olvia."
"We expect the same support and cooperation from our friend Ukraine," he said.
Russian grain exports
Russian grain exports will total around 50 million-55 million tons in the 2023-2024 season, Russian Agriculture Minister Dmitry Patrushev told Russian President Vladimir Putin on Thursday.
"Every fifth export batch of wheat in the world is of Russian origin," Patrushev said. "We expect to deliver 50-55 million tons of grain to foreign partners in the new season."
Patrushev said that Russia’s 2023 wheat crop was seen at 78 million tons and that 93% of winter grains had made it through the winter in normal conditions.
He said the total grain harvest would be at least 123 million tons.
"This volume will allow us to fully ensure the balance in the market, meet domestic demand and continue to develop our export potential," Patrushev said.
Putin said grain exports could total 55 million-60 million tons for the 2022-2023 year, though he added there was a lot of grain supply on the global market.
Wheat prices
Global wheat prices fell further on Thursday as the extension of a deal to allow Ukraine to export grains through Black Sea ports eased concerns over world supplies.
"Ultimately, it’s great news that the Black Sea grain deal has been renewed, avoiding the worst-case scenario of a cancellation," Rabobank commodities analyst Paul Joules said.
"Given that Russia has repeatedly expressed its unhappiness with the deal, the extension came as a surprise to the market, and as a result, wheat futures declined sharply following the announcement."
Wheat prices on the Chicago Board of Trade fell nearly 2% on Thursday to a two-week low of $6.25 per half a bushel after sliding by more than 3% on Wednesday.
"Given the short extension, the market will have to continue to deal with uncertainty over what happens next. When the Black Sea Grain Initiative was first implemented, the idea was that the deal would run for 120-day periods," ING said in a note.